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The lithium mine in Quebec, Canada, is co-owned by Piedmont Lithium. South Korea’s LG Chem signed a lithium supply agreement with Piedmont to secure resources for its battery products.Photo courtesy of LG Chem
SEOUL, Feb. 20 (UPI) — South Korea’s LG Chem announced a $75 million deal with US-based Piedmont Lithium to secure 200,000 tons of raw materials for electric vehicle battery production.
The agreement announced on Friday allows LG Chem to acquire a 6% stake in Piedmont Lithium, which will supply LG Chem with 50,000 metric tons of spodumene concentrate per year until 2026.
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The company expects to be able to extract 30,000 tonnes of lithium from the base, which it says will be used to produce enough batteries to power 500,000 electric cars.
LG Chem is the parent company of LG Energy Solution, the world’s second largest EV battery maker.
The contract with Piedmont will also meet the requirements of the American Inflation Reduction Act, a measure signed by the President of the United States joe biden Tax credits and incentives enticed companies to move production to the United States in August.
The terms of the IRA require that at least 40% of the value of critical minerals in any car battery must be extracted or processed in the United States or a country with which the United States has a free trade agreement.
The threshold increases by 10% per year to reach 80% by 2027.
“The agreement allows LG Chem to offer differentiated value of IRA-compliant products to North American customers by preemptively securing raw materials in the United States, our major market,” LG Chem CEO Shin Hak-cheol said in a statement.
Piedmont CEO Keith Phillips welcomes LG Chem as a shareholder.
“LG Chem is a global leader dedicated to U.S. electric vehicle battery manufacturing and plans to build one of the world’s largest cathode plants in Clarksville, Tennessee,” he said in a statement.
Industry experts pointed out that not only LG Chem, but also other Korean battery manufacturers including SK Innovation and Samsung SDI will continue to look for new battery material suppliers.
“50,000 metric tons of spodumene concentrate per year is not enough to meet the IRA’s requirements, which means LG Chem has to find more suppliers,” Kim Pil-soo, an automotive professor at Daelim University, told UPI News Korea.
“But trying to sign contracts with new U.S. battery material suppliers or companies from countries with free trade agreements with the U.S. is not an easy task. So Korean companies may continue to fight IRA requirements if the rules are not relaxed, “He said.
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