LG Energy Solution Ltd. (LGES), the pure-play electric vehicle battery maker of South Korea’s LG Group, has finalized a deal with Australian miner Liontown Resources Ltd. to be supplied with 700,000 tons of lithium spodumene concentrate for five years from 2024.

According to a disclosure by Liontown on Australian Securities Exchange (ASX) Monday, Liontown and LGES have signed a definitive full-form offtake agreement for the supply of spodumene concentrate. The agreement comes after the two parties signed a preliminary supply agreement in January.

Under the deal, LGES will receive 700,000 tons of lithium spodumene concentrate from 2024 to 2028 with an option to prolong the supply contract to another five years.

A 700,000 tons of lithium spodumene concentrate is enough to produce 100,000 tons of lithium hydroxide, which can make batteries for 2.5 million high-performance EVs with driving range of more than 500 kilometers on a single charge.

Lithium hydroxide is a battery raw material for high-capacity EVs as it can easily be mixed with nickel that boosts battery capacity.

Demand for high-nickel batteries has been on rapid rise amid competition to lengthen driving range per single charge in EVs through higher energy density by increasing the role of nickel, a key ingredient in cathode materials.

The latest agreement has allowed LGES to secure stable supply network of lithium spodumene concentrate that enables extraction of lithium hydroxide.

“The offtake agreement with Liontown provides for a long-term supply partnership, with Kathleen Valley representing the opportunity to diversify our sources of lithium with spodumene concentrate from a Tier-1 project in a world-class mining jurisdiction,” said Lee Kang-yeol, vice president of strategic procurement at LGES. “We look forward to continuing to work with Liontown through project development and operation.”

Shares of LGES were trading 2.28 percent lower at 407,500 won ($322) on Monday morning.

By Lee Eun-joo

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