LG Chem signs deal to secure 100,000 tons of lithium from ExxonMobil

South Korea’s top chemicals maker LG Chem Ltd. said on Thursday it has signed an initial agreement to secure a key battery material from US multinational gas and oil company ExxonMobil Corp.

The two companies have signed a non-binding memorandum of understanding (MOU) for a multi-year offtake agreement for up to 100,000 metric tons of lithium carbonate over 10 years from 2030.

Under the agreement, ExxonMobil will supply lithium carbonate produced from its lithium brine fields in Arkansas to LG Chem's cathode plant in Tennessee – the largest battery materials plant in the country.

LG Chem will use lithium carbonate to produce cathode materials. Lithium accounts for 60-70% of cathode production costs.

Analysts said the deal would enable LG Chem to establish a stable supply chain connecting lithium, cathodes and batteries in North America.

LG Chem is the parent of LG Energy Solution Ltd., the world’s third-largest battery maker.

“Building a lithium supply chain with ExxonMobil, one of the world’s largest energy companies, holds great significance,” said Shin Hak-cheol, chief executive of LG Chem. “We will continue strengthening LG Chem’s competitiveness in the global supply chain for critical minerals.”

LG Chem’s Tennessee cathode plant broke ground in December 2023 and is expected to have an annual production capacity of 60,000 tons. The plant offers excellent geographic accessibility for both customer deliveries and raw material imports, it said.

STRENGTHENING SUPPLY CHAIN IN THE US MARKET

ExxonMobil acquired a lithium brine field in Arkansas, covering 14,700 hectares, early last year and began lithium extraction in November using direct lithium extraction (DLE) technology.

This approach has substantially lower environmental impacts, including about two-thirds less carbon intensity than hard rock mining, according to LG.

The Arkansas brine field is estimated to hold 4 million tons of lithium carbonate, sufficient for producing batteries for 50 million electric vehicles.

“America needs a secure domestic supply of critical minerals like lithium,” said Dan Ammann, president of ExxonMobil Low Carbon Solutions. “ExxonMobil is proud to lead the way in establishing domestic lithium production, creating jobs, driving economic growth, and enhancing energy security here in the United States.”

LG said the final contract with ExxonMobil will be subject to various factors including the establishment of commercially competitive regulatory frameworks.

To strengthen its supply chain, LG Chem last year signed a deal to secure 200,000 tons of lithium concentrate from Piedmont Lithium Inc., in which LG invested $75 million for a 6% stake.

Write to Hyung-Kyu Kim at khk@hankyung.com

In-Soo Nam edited this article.