South Korean battery manufacturer, LG Energy Solution, has announced its plans to produce lithium hydroxide in Morocco in partnership with the Chinese Yahua Industrial Group. The location was chosen strategically due to the North African country’s free trade agreements with both the US and the EU, making it an attractive destination for investors.
While the details on the schedule and volume of the planned production of lithium hydroxide are unknown, LG Energy Solution representatives have indicated that the company aims to strengthen its supply chain for the material with the letter of intent.
The move to Morocco is particularly significant given recent US government regulations that stipulate that electric vehicles must use a certain percentage of critical minerals from either the US or a country with a free trade agreement to qualify for tax incentives. With the EU planning similar requirements under the Critical Raw Materials Act, Morocco’s free trade agreements with both markets make it an attractive location for battery manufacturers like LG Energy Solution.
Lithium hydroxide is a key raw material for high-nickel, high-capacity EV batteries, and LG Energy Solution has been actively pursuing partnerships and supply agreements with companies worldwide. These include a binding order with Vulcan Energy in Germany, an agreement with Sigma Lithium in Canada, and offtake agreements with companies in Chile, Australia, and the US.
Partnering with Yahua Industrial Group, which specializes in lithium hydroxide processing, will enable LG Energy Solution to secure a high-quality supply of the material. An LG Energy Solution representative has stated that “through the synergy of a stable raw material supply chain and Yahua’s excellent manufacturing technology, high-quality lithium hydroxide can be secured.”
Overall, LG Energy Solution’s move to produce lithium hydroxide in Morocco underscores the increasing importance of securing a stable supply chain for critical battery materials as the demand for electric vehicles continues to rise.
