South Korean lithium-ion battery maker SK On has signed a conditional framework agreement to buy a 10 percent stake in Australian lithium developer Lake Resources in its new rights offering, a filing showed Wednesday.
SK On will buy the stake in June 2023 on the condition that the high-purity lithium extraction from brine water in Lake Resources' flagship projects, including Kachi Project in Argentina, yields a "positive result," according to the filing with the Financial Supervisory Service.
The assessment will be based on a set of criteria by SK On, such as the quality of lithium, the productivity and the procurement cost, an SK On spokesperson said.
The exact amount of stake SK On will acquire has yet to be determined.
The strategic investment in the company listed on the Australian Securities Exchange will give SK On the offtake rights to secure up to 230,000 metric tons of clean lithium in 10 years beginning the fourth quarter of 2024, according to the statement. This will be enough to produce batteries for about 4.9 million electric vehicles.
The supply deal has an initial five-year term to get 105,000 tons of lithium combined and the deal can be extended for another five years to get 25,000 tons of lithium per annum.
This is in line with SK On's move to stabilize the supply of critical materials for electric vehicle batteries from the mid- to long-term perspective. SK On runs battery production facilities in the US, China, Hungary and Korea.