LG Energy to secure lithium hydroxide in Morocco

South Korean battery maker LG Energy Solution Ltd. will secure a key battery material in Morocco to strengthen its battery supply chain.

LG Energy Solution has signed a memorandum of understanding (MOU) with Yahua Industrial Group, a Chinese lithium compound manufacturer, for the production of lithium hydroxide in Morocco.

The North African country is a signatory to free trade agreements with the United States and the European Union (EU).

Through this MOU, LG Energy Solution plans to further strengthen the lithium hydroxide supply chain, which is a key cathode material.

With the securing of the material, it is expected that the company will be more flexible in responding to rapidly changing external business environments, such as the US's Inflation Reduction Act (IRA) and the EU's Critical Raw Materials Act (CRMA).

If lithium hydroxide is produced in Morocco, it will be advantageous in meeting the IRA requirements, which provide subsidies only to electric vehicles that use a certain percentage of domestically produced core minerals in the US or in countries that have signed an FTA with the US.

Lithium hydroxide is easily synthesized with nickel, a key raw material for high-nickel, high-capacity electric vehicle batteries.

In the battery industry, it is important to establish a stable lithium hydroxide supply chain, as batteries with a higher nickel content have a higher energy density and longer driving range per charge.

Yahua, which has signed an agreement with LG Energy Solution, is a leading Chinese lithium hydroxide manufacturer.

"Through the synergy of a stable raw material supply chain and Yahua's excellent manufacturing technology, high-quality lithium hydroxide can be secured," said an LG Energy Solution official.

Write to Nan-Sae Bin at binthere@hankyung.com