LG Energy Solution has successfully secured a large-scale lithium acquisition to strengthen its supply chain in the North American market.
LG Energy Solution announced that it has signed a long-term lithium purchasing contract with global lithium producer SQM of Chile to procure 100,000 tons over seven years. This is the largest single lithium purchasing agreement and will supply enough material to manufacture batteries for more than 2 million high-performance pure electric vehicles. The supply period will extend from this year until 2029.
This contract replaces a previous agreement LG Energy Solution had with SQM back in 2020, and it is a proactive response to the rapidly increasing global battery demand, increasing the remaining volume from the initial 36,000 tons to almost three times that amount over the seven-year period.
Through this contract, LG Energy Solution plans to receive a substantial supply of lithium hydroxide used as a raw material for ‘high-nickel, high-capacity electric vehicle batteries,’ as well as lithium carbonate primarily used for ‘low-nickel and lithium iron phosphate (LFP) batteries.’
Previously, LG Energy Solution revealed plans to construct a proprietary production facility for cylindrical batteries (27 GWh) in Queen Creek, Arizona, along with an additional LFP battery production plant with a capacity of 16 GWh for energy storage systems (ESS).
SQM, headquartered in Santiago, Chile, is one of the world’s largest lithium producers, renowned for its high-quality lithium produced using advanced technology. It holds lithium mines in Chile and Australia, which are countries party to the U.S. Free Trade Agreement (FTA), allowing compliance with U.S. IRA requirements.
Moreover, over 95% of the energy used in the lithium extraction process comes from solar power, highlighting its leadership in eco-friendly technology, which is expected to enhance LG Energy Solution’s supply chain ESG (Environmental, Social, and Governance) competitiveness.
Both companies plan to expand their strategic partnership by enhancing cooperation related to lithium production and supply in North America and Asia.
Kim Myung-hwan, Chief Production and Procurement Officer at LG Energy Solution, stated, “With this contract, we’ve strengthened the supply stability of lithium, a key mineral for batteries, and diversified our supply chain to actively respond to the IRA requirements. In the future, we will continue to provide unparalleled customer value based on stable supply of differentiated raw materials and exceptional product competitiveness.”
Carlos Diaz, Vice President of SQM, remarked, “We appreciate LG Energy Solution for trusting in SQM’s capability to provide high-quality lithium reliably. We will strengthen our partnership to contribute continuously to global decarbonization.”
Lee Sang-jin daedusj@autodiary.kr