SK on Co., a battery manufacturer under South Korea’s SK Group, has signed a natural graphite supply agreement with U.S.-based cathode materials developer Westwater Resources Inc. This move aims to strengthen SK on’s compliance with the Inflation Reduction Act (IRA) by securing a supply of U.S.-sourced graphite in its battery production value chain.

SK on announced Monday the signing of a contract with Westwater Resources for the supply of natural graphite.

Under the deal, Westwater Resources plans to provide natural graphite produced at its refinery in Kellyton, Alabama, to SK on’s U.S. facilities from 2027 to 2031. This contract is structured as a conditional off-take agreement, allowing SK on to purchase up to a maximum of 34,000 tons within the contract period, contingent upon specific conditions related to the ongoing material development.

The agreement extends the partnership following a joint battery anode development agreement signed in May 2023. Westwater Resources’ graphite-based anode material will be incorporated into SK on’s batteries, and both companies will work together to enhance battery performance.

The IRA stipulates that, starting from 2025, electric vehicle subsidies in the U.S. are only available unless the key minerals in the batteries are sourced from foreign entities of concern (FEOC). Currently, the global supply chain of graphite for anode production is predominantly controlled by Chinese companies designated as FEOCs.

Anode material, along with cathode material, separator, and electrolyte, constitutes the four essential components of lithium-ion batteries, influencing factors such as battery lifespan and charging speed.

Graphite accounts for about 95 percent of the anode material, making it a critical raw material. Notably, anode material, and graphite in particular, has been identified as one of the materials with the highest dependency on China, controlling around 85 percent of global anode material production.

Westwater Resources, a publicly listed company on the Nasdaq since 1977, originally engaged in uranium-related operations until its transformation into a battery anode material development firm after acquiring a graphite company in 2018. The company holds exploration and mining rights for a vast 17,000-hectare graphite deposit in Coosa, Alabama. Westwater Resources is constructing a graphite refining facility near the mine, targeting production commencement in 2024 with an annual capacity of 7,500 tons.

By Jung You-jung and Minu Kim

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