Lithium Ore Supply Contract and Convertible Bond Investment
Securing 1.75 Million Tons of Lithium Ore Over 15 Years
LG Energy Solution is strengthening its global supply chain by investing 340 billion KRW in an Australian lithium mining company.
On the 2nd, LG Energy Solution announced that it had signed a large-scale lithium concentrate supply and convertible bond investment agreement with Australian lithium mining company Liontown Resources. Lithium concentrate is a high-purity raw material processed from lithium ore and is the raw material for lithium hydroxide, a key ingredient in high-capacity electric vehicle batteries.
LG Energy Solution plans to receive a total of 1.75 million tons of lithium concentrate over 15 years, starting as early as the end of this year. This amount is enough to produce batteries for about 5 million high-performance electric vehicles capable of driving more than 500 km on a single charge. All supply volumes meet the subsidy requirements of the U.S. Inflation Reduction Act (IRA). Previously, LG Energy Solution signed a supply contract for 700,000 tons of lithium concentrate with Liontown in May 2022.
Along with this, LG Energy Solution also signed a convertible bond investment agreement worth approximately 250 million USD (345 billion KRW) with Liontown. Through the convertible bond investment, LG Energy Solution, as an investor, holds corporate bonds that grant the right to convert into shares. Depending on the company’s value and stock price, the investor can decide whether to realize profits by converting the bonds into shares or redeeming the principal and interest as bonds, making it one of the safer investment methods.
Liontown is a company listed on the Australian Securities Exchange (ASX) with a market capitalization of about 2 trillion KRW. It owns the Kathleen Valley mine in southwestern Australia, known for its high resource value with approximately 5.4 million tons of high-quality lithium deposits, and is expected to begin lithium production as early as this month.
Additionally, the two companies signed an agreement to jointly review investment in a conversion plant that will directly process and produce lithium concentrate from the Kathleen Valley mine into lithium hydroxide.
Through this agreement, LG Energy Solution will be able to build a more stable supply chain for key raw materials. Based on a strong partnership, the two companies plan to cooperate in establishing a supply chain for critical minerals and raw materials that meet the U.S. IRA subsidy requirements.
Kim Dong-myung, CEO of LG Energy Solution, said, "By securing a large amount of high-quality lithium, we can respond to market uncertainties and stably procure key raw materials." He added, "We will strive to provide differentiated customer value by continuously securing a stable supply of essential minerals compliant with the U.S. Inflation Reduction Act (IRA) through cooperation with strong players like Liontown."
Tim Goode, Chairman of Liontown, said, "We are pleased to establish a strategic partnership with LG Energy Solution, a global leading battery manufacturer." He added, "As the world transitions to a low-carbon future, this will be a significant turning point for Liontown to become an important core battery supply chain company."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
