LG Energy Solution has succeeded in securing large-scale lithium to strengthen the North American market supply chain.
On July 7th, LG Energy Solution revealed that it had entered into a long-term purchase agreement with SQM, a renowned lithium producer based in Chile, for the acquisition of 100,000 tons of lithium over a period of seven years.
This agreement represents the largest single purchase contract for lithium. The quantity procured through this deal will be sufficient to manufacture batteries for over 2 million pure electric vehicles. The supply period will span from the current year until 2029.
This contract replaces the previous agreement between LG Energy Solution and SQM, signed in 2020, and significantly expands the remaining portion of 36,000 tons over a seven-year period. The objective behind this expansion is to proactively address the rapidly increasing global demand for batteries.
Through this new contract, LG Energy Solution intends to secure a substantial supply of lithium hydroxide, a key raw material for high-nickel, high-capacity electric vehicle batteries, as well as lithium carbonate, primarily used in low-nickel and lithium iron phosphate (LFP) batteries.
Earlier, LG Energy Solution had unveiled its plans to establish a 16GWh LFP battery production plant for energy storage systems (ESS), in addition to a cylindrical battery production facility (27GWh) in Queen Creek, Arizona, USA.
Headquartered in Santiago, Chile, SQM is the world's largest lithium producer and is known for manufacturing high-quality lithium utilizing advanced technology. With its lithium mines located in Chile and Australia, both signatories of the US Free Trade Agreement (FTA), SQM is well-equipped to meet the requirements of the US International Trade Commission (ITC).
Furthermore, SQM's commitment to utilizing over 95% solar power in the lithium extraction process is expected to enhance LG Energy Solution's supply chain's Environmental Social Governance (ESG) competitiveness.
The two companies plan to strengthen their strategic partnership in the future, expanding their cooperation in lithium production and supply across North America and Asia.
“Through this contract, we not only strengthened the supply stability of lithium, a key mineral for batteries, but also actively responded to IRA by diversifying the supply network," said LG Energy Solution CPO President Kim Myung-hwan. "We will continue to provide the world's best customer value based on differentiated raw material supply stability and unrivaled product competitiveness."
“I am grateful to LG Energy Solution for trusting SQM's ability to stably provide high-quality lithium," said SQM Vice President Carlos Díaz. "We will further strengthen our partnership in the future so that the two companies can continue to contribute to global decarbonization.”
