LG Energy to buy more Australian lithium for US EV benefits

LG Energy Solution Ltd., the world’s third-largest electric vehicle (EV) battery maker, said on Wednesday it was set to buy more lithium, a key mineral in battery cells, from Australia to increase its benefits from a US policy that favors products made in the country or its trading partners.

South Korea's leading battery producer said it signed an offtake agreement for lithium concentrate with Wesfarmers Chemicals, Energy and Fertilisers (WesCEF). Under the agreement, LG Energy will buy up to 85,000 tons of the mineral from WesCEF this year with a plan to discuss further procurement from the chemicals unit of Wesfarmers Ltd, an Australian conglomerate.

The Lithium concentrate could be used to produce some 11,000 tons of lithium hydroxide, enough to equip batteries in 270,000 EVs which can travel more than 500 kilometers (311 miles) on a single charge, according to LG Energy.

"By partnering with major suppliers with great potential such as WesCEF, we will ensure stable procurement of key raw materials, thereby delivering advanced battery technologies at competitive prices," said LG Energy's Senior Vice President of Procurement Center Lee Kang Yeol in a statement.

LG Energy, the cell supplier of the world’s No. 2 EV maker Tesla Inc., earlier agreed to buy 50,000 tons of WesCEF's battery-grade lithium hydroxide for five years starting in 2025. It will be produced at the Mt. Holland lithium project in Western Australia, which is under construction and expected to begin production in the first half of 2025. The project has secured over 2 billion Australian dollars ($1.3 billion) from its joint venture partners WesCEF and Sociedad Química y Minera de Chile (SQM).

COOPERATION IN UPSTREAM MINERALS, CHEMICALS PROCESSING

WesCEF’s lithium hydroxide meets the requirements of the US Inflation Reduction Act (IRA), which provides benefits to EV customers, LG Energy said. The IRA grants up to $7,500 per EV to customers if the eco-friendly vehicle is assembled in the US and the battery's minerals are either mined or processed in the US or one of its free trade partners, such as Australia.

LG Energy and WesCEF are also looking to cooperate in upstream minerals and chemical processing on IRA-compliant critical minerals.

The Korean company already agreed with SQM, the world’s top lithium producer, to buy more than 100,000 tons of battery-grade lithium carbonate and lithium hydroxide from 2023 to 2029. It has also secured 25% of the lithium concentrate produced in Canada by Australia’s Green Technology Metals Ltd. and 700,000 tons of the mineral from Australia's Liontown Resources Ltd.

Critical minerals and raw materials secured through those deals will be assembled into LG Energy's lithium-ion batteries at manufacturing facilities in North America, making them IRA-compliant.

The company has eight facilities operating or under construction in the region: two stand-alone facilities in Michigan and Arizona and six joint venture facilities with major automakers.

Write to Hyung-Kyu Kim at khk@hankyung.com
 
Jongwoo Cheon edited this article.