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LG Energy Solution signs cooperative deal with Chinese lithium producer

Published: 05 Apr. 2023, 14:58

Korean battery maker LG Energy Solution signed a preliminary agreement with a Chinese lithium producer to collaborate on the supply of lithium hydroxide in Morocco, as part of efforts to diversify the sourcing of the key battery material.

The world's second largest EV battery supplier will work together with Yahua, a Sichuan-based chemicals manufacturer, to produce battery-grade lithium hydroxide to the African country, the company said in a release Wednesday without providing further details.

Lithium hydroxide is feedstock for cathodes, one of the key components in electric vehicle batteries. It is easy to combine with nickel, a critical mineral that determines the power and driving range of EV battery cells.

LG Energy Solution said the partnership will help bolster the supply chains for core battery materials and meet the sourcing requirements in the United States.

The U.S. Inflation Reduction Act (IRA) gives up to $7,500 tax credits to EV buyers whose vehicles were assembled in North America and made with equipment using minerals mined or processed in the United States or countries or regions that have a free trade agreement (FTA) with the United States.

The deal will also help the Korean company prepare for the proposed Critical Raw Materials Act, a similar legislation on minerals supply chains being pushed for by the European Union. Morocco has FTAs with the United States and the EU.

The battery unit is ramping up efforts to strengthen its global sourcing of critical minerals. It has signed lithium-related supply deals with Vulcan Energy in Germany, Australia's Liontown Resources and Chile's SQM.

BY PARK EUN-JEE, YONHAP [[email protected]]