LG Chem, the South Korean chemical company, has recently secured a new source of lithium from North America. The company has signed a series of agreements with Piedmont Lithium, a mining company that will supply 200,000 metric tons of spodumene concentrate (SC6) over four years, starting in the third quarter of 2023. In addition, LG Chem has taken a financial stake in Piedmont.
The North American Lithium (NAL) mine in Quebec, in which Piedmont holds a 25 per cent stake, is currently the only lithium mine in North America that is mining commercially. This source of battery materials is becoming increasingly important due to EV tax credit requirements in the US, which is why LG Chem’s announcement is crucial to North American customers.
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The focus on sourcing materials in North America is no coincidence. LG Energy Solutions (LGES), LG Chem’s battery subsidiary, is expanding its existing battery plant in Michigan and building new cell factories in Canada and Arizona, USA. LG Chem is also General Motors’ battery partner in the Ultium Cells joint venture, which is building several battery factories in the US, making the demand for materials high. Moreover, batteries with precursors from North America are in high demand in the US due to the new EV tax credit regulations.
LG Chem’s announcement is also significant because it is the first Korean battery materials company to secure SC6 from North America. LGES has signed several agreements since 2021 for the supply of lithium from North America, such as with Snow Lake Resources and Avalon Advanced Materials, and it has also signed offtake agreements with Compass Minerals in the US and Sigma Lithium in Canada. None of these mines are currently in commercial operation, so LG Chem’s statement holds true.
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The acquisition of lithium from Piedmont will allow LG Chem to extract about 30,000 metric tons of lithium hydroxide, which is enough to make batteries for about 500,000 electric vehicles. As part of the agreement with Piedmont, LG Chem also signed a $75 million capital investment and acquired a six per cent stake in the company. Additionally, LG Chem will receive preferential negotiation rights for an additional 10,000 tons per year of lithium hydroxide produced by Piedmont Lithium in the United States.
LG Chem’s announcement comes after it announced the construction of the largest factory for the production of cathode materials for electric car batteries on American soil last November. As demand for electric vehicles continues to rise, securing a reliable source of battery materials is essential for the industry’s growth, and LG Chem’s move to secure a new source of lithium from North America is a significant step in that direction.
