SK On signs $118 million LFP cathode supply deal with L&F

SK On agreed Sept. 18, 2026 to buy 161.7 billion won ($118.2 million) in lithium iron phosphate cathode materials from supplier L&F to feed its energy storage system production lines.

The contract equals 7.51% of recent annual revenue for L&F, a Daegu-based cathode producer that built its business on nickel-rich chemistries for electric vehicles.

SK On will route the materials into energy storage system (ESS) cell lines at its Seosan facility in South Korea and its factory in Georgia in the United States.

The binding agreement follows a preliminary memorandum of understanding that the two companies reached on July 11, 2025. It establishes South Korea's first domestic commercial supply chain for LFP active materials.

Chinese battery manufacturers control more than 90% of global LFP cell manufacturing and nearly all upstream processing. The Seoul partnership creates an alternative channel compliant with Western supply-chain restrictions.

The commercial terms cover 27 months from Sept. 17, 2026 through Dec. 31, 2028, according to a regulatory disclosure submitted to the Financial Supervisory Service.

Both parties retain an option to prolong deliveries for an additional three years through Dec. 31, 2031 upon mutual review, the filing stated.

L&F will manufacture the cathode powder through its wholly owned subsidiary, L&F Plus, at a dedicated plant in Daegu. That manufacturing facility was completed in May 2026.

The facility produces third-generation LFP cathode powder with a press density of at least 2.50 grams per cubic centimeter. Higher press density allows battery engineers to pack more active material into standard cell formats.

The deal marks a strategic shift for South Korean cathode manufacturers. Those suppliers previously focused capital expenditures almost exclusively on high-nickel chemistries such as nickel-cobalt-manganese (NCM).

Automakers and utility operators are shifting procurement toward LFP cells because the chemistry avoids costly cobalt and presents lower thermal runaway risks.

South Korean cell producers lost market share to Chinese rivals CATL and BYD in grid storage markets because domestic suppliers lacked competitive LFP capacity.

SK On plans to use the non-Chinese cathode input to compete for utility storage contracts in North America. Strict domestic sourcing requirements under United States federal subsidy programs discourage Chinese materials.

L&F COO Lee Byung-hee and SK On Head of Raw Material Procurement Kim Seong-tan signed the pact in Seoul on Sept. 17. Press summaries circulated publicly the following morning.

The regulatory filing does not disclose specific annual delivery tonnages or unit pricing formulas, which the parties redacted as trade secrets.

Deliveries will begin this quarter to support qualification runs across the designated factory lines in Chungcheongnam-do and Georgia.

The supply schedule runs until the first review window opens ahead of the Dec. 31, 2028 expiration date.