LG Energy Solution’s EV deals

LG Energy Solution (LGES) has struck supply deals with a pair of Canadian lithium mining companies as the battery cell manufacturer deepens its local supply chain in response to strong North American electric vehicle demand.

The South Korean company, which is building EV battery cells in partnership with General Motors and Stellantis in the United States and Canada, signed memoranda of understanding with Winnipeg-based Snow Lake Lithium Ltd. and Avalon Advanced Materials Inc. in Toronto Sept. 22.

The non-binding deals will see Snow Lake supply LGES with about 20,000 tonnes of lithium hydroxide annually between 2025 and 2035. Avalon will ship the battery cell maker about 11,000 tonnes of lithium hydroxide per year for a five-year period starting in 2025.

Financial terms of the deals were not disclosed.

LGES CEO Youngsoo Kwon said the agreements are among the “crucial steps” the company is taking to build a stable, raw material supply chain in North America.

“By constantly investing in upstream suppliers and establishing strategic partnerships with major suppliers of critical minerals, LGES will continue to ensure the steady delivery of our top-quality products, thereby further advancing the global transition to EVs and ultimately to a sustainable future,” he said in a release.

The pair of deals come amid increased activity in Canada’s growing battery ecosystem. LGES and Stellantis announced plans to build a $5-billion battery cell plant in Windsor, Ont. this March, and billions in investment for other EV supply chain projects have filtered into Ontario and Quebec since the start of 2022.

In addition to North American EV demand ramping up, LGES said the recently enacted U.S. Inflation Reduction Act has also “stressed the significance” of battery manufacturers building local supply chains.

Currently, battery minerals processed in China dominate the EV supply chain. The new legislation includes an update to the country’s EV tax credit, which requires EVs have an escalating percentage of battery materials from U.S. free trade partners to fully qualify for the incentive.

Lithium from both Canadian suppliers would help automakers hit that threshold.

Snow Lake is developing a mining project in central Manitoba. Its site, which it plans to operate on a carbon-neutral basis, covers approximately 55,000 acres (22,000 hectares) outside Snow Lake. Avalon’s Separation Rapids project is located north of Kenora at the western end of Ontario.

Both lithium miners are also focused on local processing. Snow Lake is working to develop a lithium hydroxide processing plant in the Winnipeg area, while Avalon is advancing a similar project in Thunder Bay, Ont.

LGES signed the memoranda of understanding with the two Canadian lithium miners the same day it reached a binding deal with Toronto-based Electra Battery Materials Corp. Under that supply agreement, Electra will provide LGES with 7,000 tonnes of cobalt sulfate processed at its Ontario refinery between 2023 and 2025.

The battery cell manufacturer did not immediately respond to requests for comment about which of its cell plants the battery materials will supply.

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