LG Energy Solution partners with Australian supplier to chase IRA subsidy

BY SHIN HA-NEELG, Korea JoongAng Daily - Energy Solution signed a one-year battery material supply deal with an Australian lithium supplier, a move to enhance its response to a U.S. subsidy program aimed at barring battery materials sourced from China.

The battery maker said Wednesday that it had signed a supply contract with Wesfarmers Chemicals, Energy & Fertilisers (WesCEF), an Australian lithium producer under Wesfarmers, to procure spodumene concentrate, which is feedstock for lithium extraction.

In signing the deal, WesCEF agreed to supply 85,000 tons of spodumene concentrate to LG Energy Solution this year, which amounts to 11,000 tons of lithium hydroxide and battery cells that can power 270,000 high-performance EVs with a range of more than 500 kilometers (311 miles) per single charge.

The value of the deal has not been disclosed.

The two companies are already discussing a possible extension of the supply deal, according to LG Energy Solution.

Lithium produced by WesCEF qualifies for the U.S. Inflation Reduction Act (IRA) incentive program. Under the tightened IRA, which took effect in 2024, an eligible vehicle may not contain any battery components “manufactured or assembled by” a “foreign entity of concern” in order to qualify for up to $7,500 in tax credits.

LG Energy Solution previously signed a five-year contract with WesCEF in September 2022 for 50,000 tons of lithium hydroxide to be produced at the Mount Holland Lithium Project from 2026 to 2030.

Covalent Lithium, a joint venture of Wesfarmers and Sociedad Química y Minera de Chile (SQM) has been developing and operating the Western Australian Mount Holland Lithium Project since 2019. The Mount Holland site will begin producing lithium hydroxide in 2025.

To mitigate possible supply chain risks, LG Energy Solution acquired a 7.9 percent stake in Australia’s lithium supplier, Green Technology Metals, and signed a five-year supply deal for 25 percent of the spodumene concentrate produced at Green Technology Metals’ Seymour project in Canada.

Source: https://koreajoongangdaily.joins.com/news/2024-02-14/business/industry/LG-Energy-Solution-partners--with-Australian-supplier-to-chase-IRA-subsidy/1980682 

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