LG Chem signs huge lithium hydroxide deal

LG Chem has secured 48,000 tons of lithium hydroxide from Jiangxi Ganfeng Lithium, the company said Wednesday.

Lithium hydroxide is one of the core materials used to make electric car batteries.

Under the deal, the Chinese company will supply a total of 48,000 tons over four years starting next year. The amount is enough to make batteries for roughly a million electric cars with a maximum driving range of 320 kilometers (199 miles) per charge.

The amount of lithium hydroxide to be supplied per year was not disclosed.

The deal comes as battery makers move to secure stable supplies of ingredients to make batteries. With demand for greener cars on the rise, the price of battery materials has been shooting up mainly due to a shortage of supplies.

Prior to partnering with the Chinese company, the Korean battery maker signed a five-year deal with Nemaska Lithium, a Canadian supplier of lithium hydroxide, in June. The deal, set to begin in the second half of 2020, gives LG Chem 7,000 tons every year.

In April, LG Chem announced it will invest 239.4 billion won ($211.2 million) by 2020 to establish two joint ventures with China’s Zhejiang Huayou Cobalt in an attempt to secure a stable supply of cobalt, another key ingredient for electric car batteries.

“With the electric car market showing substantial growth, it has become ever more important to secure enough battery materials and develop competitive battery formulas,” said Yoo Ji-young, president of the advanced materials division at LG chem.

In a recent second quarter performance disclosure, the Korean company said its order backlog for electric car batteries exceeded 60 trillion won as of the end of June. As of the end of last year, the company had 42 trillion won worth of battery orders globally.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]