Compass enters deal to supply LG with lithium from US project

Compass Minerals signed a non-binding memorandum of understanding June 29 to supply electric vehicle battery producer LG Energy Solution with battery-grade lithium products starting in 2025 from its brine development project at its Ogden, Utah, solar evaporation facility.

"Our lithium vision is to support the North American battery market by accelerating the development of a sustainable and secure domestic lithium supply chain," said Chris Yandell, the head of lithium business for Compass, in a statement. "Entering into this commercial relationship with a proven manufacturing leader like LGES will help enable that vision, as well as assist LGES in solidifying its US supply chain."

Compass' Ogden evaporation facility near Utah's Great Salt Lake produces salt, sulfate of potash and magnesium chloride. The Overland Park, Kansas-based mineral producer is attempting to also produce lithium at the facility by 2025 at an initial capacity of up to 10,000 mt/year on a lithium carbonate equivalent basis.

The Ogden facility could scale up its lithium carbonate equivalent capacity to between 30,000 mt/year and 40,000 mt/year in subsequent phases beyond 2025.

Compass said it has access to a lithium carbonate equivalent resource of about 2.4 million mt at the Great Salt Lake. The company currently does not produce any lithium.

The lithium supply agreement commits Compass to provide LGES with at least 40% of its initial 10,000 mt/year capacity for up to seven years. The deal includes an option for an additional 40% of annual lithium supply from Ogden's higher capacity capability if subsequent phases of development are successful at the project.

Purchase pricing of the lithium supply under the MoU would be based on market price, and sales volume thresholds would be dependent upon product qualifications, according to the statement.

Platts assessed the price of seaborne lithium hydroxide at $76,000/mt CIF North Asia June 28, up sharply from $31,700/mt at the beginning of 2022 and $9,000/mt at the start of 2021, according to data from S&P Global Commodity Insights.

Lithium carbonate on the same basis was assessed at $72,500/mt June 28, rising from $33,800/mt at the start of 2022 and from $6,350/mt at the start of 2021.

LG growing North American battery position

The supply deal with Compass signals South Korea based-LG's continued push to expand its battery footprint in North America through its LGES and LG Chem subsidiaries.

"Securing key raw materials has become critically important in order to maintain our lead position in the global battery market," said Dongsoo Kim, senior vice president of procurement for LGES, in the statement. "We believe partnering up with Compass Minerals will aid in achieving that goal while solidifying supply chains in the US."

LGES has built two battery gigafactories in the US through its Ultium joint venture with General Motors in recent years, and the companies announced in January that they would set up a third such facility in Lansing, Michigan, with a 2023 target start date.

In March, LGES said it was planning an 11 GWh cylindrical battery factory in Queen Creek, Arizona, and separately, it would jointly build Canada's first large-scale electric vehicle battery manufacturing facility in Windsor, Ontario, with Stellantis.

On the battery materials side, LGES and LG Chem finalized deals in April with North American battery recycler Li-Cycle. Under the deals, LG Energy Solution will supply Li-Cycle with lithium-ion battery manufacturing scrap for recycling over a 10-year period, and Li-Cycle will sell the nickel sulfate that it extracts from the scrap to both LGES and LG Chem over a 10-year period for their respective North American battery production operations.

Globally, LGES has also inked several lithium supply deals, including agreements with Sigma Lithium in Brazil, Infinity Lithium in Spain, Vulcan Energy in Germany and Liontown Resources in Australia.