LG Energy Solution Signs Cobalt and Lithium Supply Agreements with Three Canadian Companies to Secure US Supply Chain Position

Electra, Avalon, Snowlake
Securing Key Battery Raw Materials Including Cobalt Sulfate

LG Energy Solution electric vehicle battery factory in LG, Michigan, USA. Photo by LG Energy Solution

[Asia Economy Reporter Choi Seoyoon] LG Energy Solution has signed supply agreements for cobalt and lithium with three Canadian mining companies that produce key raw materials for batteries. This move reflects the company's efforts to rapidly establish a solid supply chain within the North American region in response to the U.S. Inflation Reduction Act (IRA).

On the 22nd (local time), LG Energy Solution announced that it had signed separate agreements with Canadian mining companies Electra, Avalon, and Snowlake to receive supplies of key battery raw materials such as cobalt sulfate and lithium hydroxide.

The signing ceremony held in Toronto, Canada, was attended by Lee Chang-yang, Minister of Trade, Industry and Energy; Heather Stefanson, Premier of Manitoba; George Pirie, Minister of Ontario; Kim Dong-soo, Executive Vice President of LG Energy Solution; Trent Mell, CEO of Electra; Donald Bubar, CEO of Avalon; and Philip Gross, CEO of Snowlake.

LG Energy Solution agreed to receive 7,000 tons of cobalt sulfate annually from Electra for three years starting in 2023. Electra is the only supplier in North America capable of refining cobalt sulfate.

Additionally, LG Energy Solution will receive 55,000 tons of lithium hydroxide annually from Avalon for five years starting in 2025, and 200,000 tons annually from Snowlake for ten years. Lithium hydroxide is a key raw material for high-performance, high-capacity electric vehicle batteries.

LG Energy Solution plans to finalize the main contracts after further discussing detailed terms regarding the supply of these key raw materials with the companies.

Securing Battery Supply Chain Advantage in North America Following 'IRA Enforcement'

With the recent enforcement of the IRA, LG Energy Solution is expanding strategic partnerships by signing mid- to long-term supply contracts with companies that mine and process key battery raw materials within the North American region.

LG Energy Solution explained, "As global business uncertainties increase, the ability of companies to diversify their raw material supply chains has become a critical criterion for future competitiveness. We aim to reduce dependence on raw materials concentrated in certain countries and establish a supply chain capable of proactive and flexible responses to business uncertainties."

Canada, where Electra, Avalon, and Snowlake are located, is also a global mineral-exporting country ranked 5th in nickel reserves and 3rd in refined cobalt production. LG Energy Solution expects that this agreement will further strengthen its ability to build a supply chain that meets the IRA incentive conditions.

Earlier in June this year, LG Energy Solution signed an MOU with U.S. lithium producer Compass Minerals to supply lithium carbonate and hydroxide, agreeing to receive 40% of the eco-friendly lithium carbonate and hydroxide produced by Compass Minerals for seven years starting in 2025.

Vice Chairman Kwon Young-soo: "Achievement in Establishing Stable Raw Material Supply Chain... Expanding Strategic Partnerships with Key Mineral Companies"

Kwon Young-soo, CEO and Vice Chairman of LG Energy Solution, said, "This agreement is a meaningful achievement in establishing a stable raw material supply chain in the North American market, where we have committed to focusing our core capabilities through the announcement of our mid- to long-term business strategy. LG Energy Solution will continue to expand strategic partnerships with key mineral companies to become the most trusted and beloved profitable company by providing the highest level of QCD (Quality, Cost, Delivery) to our customers."

In addition to the North American market, LG Energy Solution is striving to build a management environment that can stably procure key raw materials even if unpredictable supply chain shocks occur, such as sudden price surges in specific countries.

In fact, LG Energy Solution has secured mid- to long-term supply contracts through various agreements with overseas mining companies, including a 5-year contract to supply 45,000 tons of lithium hydroxide with German lithium producer Vulcan Energy in Europe; securing 700,000 tons of lithium concentrate, the raw material for lithium hydroxide, from Australia's Liontown for 5 years; securing 690,000 tons of lithium concentrate from Canada's Sigma Lithium for 6 years; and signing a 9-year contract to supply 55,000 tons of lithium hydroxide and lithium carbonate with SQM, Chile's leading lithium company and the world's largest lithium reserve holder.