LG Energy Solution signs seven-year lithium deal with Chile’s SQM

[Courtesy of LGES]

LG Energy Solution Ltd. has signed a deal with Chile’s lithium miner, Sociedad Quimica y Minera de Chile SA (SQM), to buy lithium for seven years as part of a move to enhance its supply chain in North America, according to the company on Friday.

Under the deal, the company will receive 100,000 tons of lithium from SQM for seven years until 2029, starting this year. This is the largest single purchase contract for lithium and is enough to manufacture batteries for more than 2 million high-performance pure electric vehicles. It didn’t disclose the value of the deal.

“Through this agreement, we have not only strengthened the supply stability of a key mineral for batteries, but also diversified our supply chain, increasing our capacity to respond with the IRA,” said Kim Myung-Hwan, the chief procurement officer at LG Energy Solution. “We will continue to provide world-class customer value based on our differentiated raw material supply stability and unrivaled product competitiveness.”

The latest deal replaces one previously signed between the company and SQM in 2020.

It is also three times the volume of their previous existing seven-year supply, which stood at 36,000 tons, according to the company, in response to the rapidly growing global demand for batteries.

Under the new deal, LG Energy Solutions will also have a large supply of lithium hydroxide, the raw material in high-nickel, high-capacity electric vehicle batteries, as well as lithium carbonate, the raw material primarily used for low-nickel and lithium iron phosphate (LFP) batteries.

LG Energy Solutions plans to build a 27 gigawatt-hour (GWh) cylindrical battery plant and a 16 GWh LFP battery production plant in Queen Creek, Arizona. The LFP batteries are used for energy storage systems (ESS).

Headquartered in Santiago, SQM is the world’s largest lithium producer. It has lithium mines in Chile and Australia, both of which have free trade agreements with the U.S., enabling it to meet the requirements under the U.S. Inflation Reduction Act (IRA).

LG Energy Solution and SQM plan to expand their strategic partnership to collaborate on lithium production and supply across North America and Asia.