LG Energy Solution, Compass Minerals sign lithium carbonate deal for EVs

Kim Dong-soo, right, senior vice president of LG Energy Solution, poses with Chris Yandell, head of lithium at Compass Minerals, after signing a supply deal on Nov. 8. [LG ENERGY SOLUTION]

LG Energy Solution signed a supply deal with Kansas-based Compass Minerals to source lithium carbonate, a key raw material in electric vehicle (EV) batteries.

Under the deal, Compass Minerals will supply LG Energy Solution with 40 percent of the lithium carbonate it produces, approximately 11,000 tons, every year for six years starting in 2025.

Lithium carbonate is one of the main raw minerals in making cathodes, one of four core materials in lithium-ion batteries that power EVs. Made of lithium, nickel, cobalt and manganese, cathode materials account for 40 percent of the production cost of an EV battery.

Compass Minerals is developing lithium resources with brine produced from its facility on the Great Salt Lake in Utah. It utilizes a sustainable extraction method using renewable energy such as solar and wind power.

Compass is the first U.S.-based lithium producer to partner with LG Energy Solution, which is trying to strengthen its supply chain in North America to meet the soaring demand for EVs, the battery maker said.

“This offtake agreement with Compass Minerals culminates our continued endeavors to establish a stable supply for critical minerals in North America, as we adapt to recent regulatory changes and intensifying competition over key battery raw materials,” said Kim Dong-soo, senior vice president at LG Energy Solution.

The latest deal with Compass Minerals is part of LG Energy Solution's attempt to reduce its dependency in China. The U.S. government's Inflation Reduction Act (IRA) restricts the use of critical minerals in EVs that are extracted or processed in China.

The U.S. EV subsidy rules specify that starting from 2023, 40 percent of critical-mineral value will have to come from the United States or countries with which the United States has signed free trade agreements to qualify for $3,750 of credit toward EV purchases. That number increases by 10 percentage points a year until it reaches 80 percent in 2027.

Critical minerals include lithium, cobalt, nickel, tin, tungsten and graphite.

To qualify for the subsidy, a vehicle must be completely free of Chinese critical minerals from 2025.

BY SARAH CHEA [chea.sarah@joongang.co.kr]