(Yicai Global) May 17 -- Chinese aluminum materials processor Jiangsu Dingsheng New Materials Joint-Stock has scored a deal to supply South Korean battery giant SK On with 32,400 tons of the aluminum foil used in new energy vehicle batteries over the next four and a half years.

Subsidiary Hangzhou Five Star Aluminum will provide the aluminum foil to SK On and certain factories that the Seoul-based company specified from the second half of this year to 2027, Zhenjiang, eastern Jiangsu province-based Dingsheng said yesterday, citing a deal recently penned between the unit and SK On.

The names of the factories were not mentioned, and no financial details were disclosed. The pair will negotiate the price of the foil and the procurement amount based on actual needs, it added.

The deal doesn't include supplies from Dingsheng’s production base in Italy, it said. Should the aluminum foil samples from the Italian plant be approved for use, the pair will sign a separate contract.

This is the third major deal that Dingsheng has inked with battery makers in the last four months. In March it signed a new contract with Contemporary Amperex Technology to supply more than half of the Chinese firm’s aluminum foil requirements. And in February it received a large order from LG Energy Solutions to provide the South Korean battery giant and its three China subsidiaries with 61,000 tons of the foil over the next four years.

Dingsheng has five processing bases for aluminum materials around the world, including one in Thailand and one in Italy, all of which can easily shift production to aluminum foil for EV batteries. The product has a high profit margin at around 29 percent and the company has been hiking output in recent years to meet surging demand.

Dingsheng’s sales of aluminum foil for EV batteries more than doubled in 2021 from the year before to 55,700 tons, according to its annual financial report. As a result, revenue jumped over two-and-a-half fold to CNY1.8 billion (USD261.3 million), accounting for about 10 percent of total revenue.

Dingsheng’s share price [SHA:603876] closed down 0.64 percent at CNY34 (USD5) today. Earlier in the day it advanced 1.9 percent to hit CNY34.88.

Editor: Kim Taylor