LG Energy Signs 10-Year Offtake Agreement, Annually Purchasing 8,000 Tons of U.S. Lithium Carbonate

On August 31st, LG Energy Solution announced that it has signed a binding multi-year supply agreement with Smackover Lithium to purchase battery-grade lithium carbonate produced in the United States, further strengthening the security of upstream raw material supplies for its North American market.

Core of the agreement: 10-year long-term contract, locking in 8,000 metric tons of lithium carbonate annually

According to the newly signed supply agreement, starting from the commercial operation of the project, Smackover Lithium will supply 8,000 metric tons of battery-grade lithium carbonate to LG Energy Solution every year for the next 10 years. This is a mandatory supply clause, which will provide LG Energy with a stable and long-term supply of lithium raw materials.

Smackover Lithium is a joint venture established by lithium mining enterprise Standard Lithium Ltd. and Norwegian international energy company Equinor, with shareholding ratios of 55:45 respectively. Standard Lithium is responsible for the project's operation and management.

Project background: Arkansas DLE brine lithium project in the US

This batch of lithium carbonate will be produced from the Southwest Arkansas Lithium Project located in Arkansas, USA. The project uses direct lithium extraction (DLE) technology to extract lithium resources from underground brine, and is a key North American brine lithium development project. The first phase of the project plans to have an annual battery-grade lithium carbonate production capacity of 22,500 tons, with the first products scheduled to roll off the line in 2028, and the contracted supply is expected to officially start in 2029.

Prior to this, the joint venture had reached a supply agreement with commodity trader Trafigura for 8,000 tons per year. Combined with this order from LG Energy Solution, most of the first-phase production capacity of the project has been locked with downstream customers, greatly reducing the risks of the project's commercial implementation.

Strategic significance of the supply chain, adapting to North American battery production layout

Lithium carbonate is a core raw material for lithium batteries, and meets the production needs of electric vehicle and energy storage lithium iron phosphate lines. As LG Energy Solution continues to expand its battery factories across the United States, the importance of local North American lithium resource supplies continues to rise.

Through this long-term agreement, LG Energy Solution has obtained lithium raw materials produced in the United States, which can match local battery manufacturing bases, build a regional supply chain from lithium raw materials to cell manufacturing, and also align with the North American orientation of localizing critical mineral supply chains, reducing supply chain fluctuation risks caused by overseas raw material transportation and geopolitical policies.

Industry impact: Accelerating the commercialization process of North American brine lithium

This cooperation is not only an important part of LG Energy Solution's upstream resource layout, but also marks a key step in the commercial implementation of the Smackover brine lithium project. Projects in the North American DLE lithium extraction track have been advancing intensively in recent years, and the signing of long-term contract orders is an important precondition for brine lithium projects to complete financing and construction.

Industry analysts believe that more and more overseas battery manufacturers are locking in domestic US lithium mines through supply agreements, which will continue to drive the acceleration of North American lithium resource development and change the global lithium raw material supply pattern.