LG Chem to acquire 6% stake in Piedmont Lithium

North American Lithium (NAL) mine in Quebec, Canada [LG CHEM]

LG Chem will invest $75 million to acquire 6 percent of New York-based Piedmont Lithium in an effort to secure a stable supply of battery minerals that satisfy Inflation Reduction Act (IRA) standards.

The two companies also inked an offtake agreement to source spodumene concentrate, high-purity material that processes lithium ore, from which LG can extract lithium hydroxide.

Lithium hydroxide is a key raw material in making cathodes, which account for 40 percent of the cost of electric vehicle batteries.

Under the deal, Piedmont will supply 200,000 tons of spodumene concentrate for four years starting from the third quarter.

LG Chem can extract approximately 30,000 tons of lithium from spodumene concentrates, which is enough to manufacture batteries for 500,000 high-performance EVs.

The deal will be closed around Feb. 24.

Founded in 2016, Nasdaq-listed Piedmont Lithium is engaged in lithium projects in North Carolina and Tennessee and owns 25 percent of the North American Lithium (NAL) mine in Quebec, Canada.

NAL is currently the only lithium mine in North America capable of commercial production.

“This agreement allows LG Chem to provide differentiated values to North American customers with products that satisfy IRA standards by preemptively securing raw materials in the U.S., our key market,” said Shin Hak-cheol, CEO of LG Chem.

With the equity investment, Piedmont has also agreed to offer LG Chem priority negotiation rights for 10,000 tons of lithium hydroxide per year produced at either of its facilities in Tennessee or North Carolina.

In November, LG Chem announced a $3.2 billion investment to build a cathode plant in Clarksville, Tennessee, its first factory for the battery component in the United States.

LG Chem aims to log 20 trillion won ($15.4 billion) in revenue from its battery material business in 2027, quadruple its current revenue of 5 trillion won.

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