LG Energy Solution (LGES), a leading South Korean battery cell manufacturer, has recently boosted its order from SQM (Sociedad Química and Minera de Chile), a prominent lithium producer based in Chile. The increase in demand is so substantial that it nearly doubled the quantity of battery-grade lithium carbonate and lithium hydroxide specified in their previous agreement.
Initially, in 2021, the two companies had entered into a contract for the supply of 55,000 tonnes of lithium by the year 2029. However, a new deal has now been finalized, elevating the quantity to over 100,000 tonnes of battery-grade lithium carbonate and lithium hydroxide to be delivered by 2029.
Carlos Diaz, Executive VP of Lithium at SQM, expressed gratitude for LGES’s trust in their ability to provide refined lithium products for their electric vehicle cells. This partnership has made LGES the most significant customer for the Chilean company, briefly surpassing its status when SK On, another South Korean battery cell manufacturer, secured a lithium supply contract with SQM last year for approximately 57,000 tonnes over a span of five years. This supply volume from SQM enables SK On to manufacture batteries for approximately 1.2 million electric vehicles.
The importance of lithium products from Chile extends beyond LGES’s reliance on them. Car manufacturers also value them greatly due to trade agreements. Electric vehicles equipped with battery cells containing lithium sourced from Chile can qualify for tax credits in the United States under the US Inflation Reduction Act. To receive subsidies, which are granted based on specific criteria, including the extraction or processing of a certain percentage of critical battery materials within the US or in countries with free trade agreements with the US, using lithium from Chile proves advantageous.
