LG Energy Solution (LGES) is branching out in its efforts to secure supply chain of materials as it ramps up its battery production to satiate the growing market demand.
LGES announced that it has signed a non-binding Memorandum of Understanding (MoU) with Compass Minerals, a leading provider of essential minerals, critical to producing battery-grade lithium.
Under the terms of the MoU, Compass Minerals would supply LGES with lithium carbonate and hydroxide. The MoU states that LG Energy Solution would be supplied with as much as 40% of Compass Minerals' planned annual phase-one lithium carbonate and lithium hydroxide production for 7 years starting in 2025. LGES and Compass Minerals have committed to continuing good-faith negotiations toward a binding supply agreement.
Compass Minerals is widely known to deliver essential minerals like Sulfate of Potash, Sodium Chloride and Magnesium Chloride and is currently pursuing development options available to service growing U.S. market demand for battery-grade lithium.
The battery manufacturer added that this is the first lithium producer, based in the U.S., to partner up with the company as it looks to solidify its supply chain in the U.S. and cater to the growing market demand for EVs in North America.
"Securing key raw materials has become critically important, in order to maintain our lead position in the global battery market," said Dongsoo Kim, Senior Vice President of Procurement Center at LG Energy Solution. "LGES will make sure to support establishment of steady supply chain in North America, while it continues to seek and acquire environmentally friendly produced battery-grade lithium worldwide."
LG Energy Solution has been at the forefront in securing key raw materials for EV battery production. Apart from the MoU with Compass Minerals, LGES signed an MoU with SQM of Chile as the two firms agree to commit to investigate and develop joint investment projects of electro-mobility industry value chain.
LGES also executed an offtake agreement with Liontown Resources Limited for the supply of spodumene concentrate from the Kathleen Valley Lithium Project. The deal states that LGES be supplied of up to 150,000 dry metric tonnes per annum of spodumene concentrate, starting 2024.
The battery manufacturer signed a binding lithium hydroxide offtake agreement with Germany's Vulcan Energy Resources Ltd. earlier this year for at least 41,000 tonnes of battery grade lithium chemicals over the 5 years starting 2025.
Previously, LGES had agreed to purchase up to 150,000 tonnes a year of battery-grade lithium as part of a six-year "take-or-pay" agreement from the Vancouver-based Sigma Lithium in October of last year.