LG Energy Solution to offtake lithium over 10 years from Smackover

LG Energy Solution will offtake battery-grade lithium carbonate from US-based Smackover Lithium under a 10-year deal, the South Korean battery maker said in a statement Aug. 31, to help support its energy storage system goals.

LG Energy Solution signed a binding offtake agreement with Smackover for 8,000 metric tons/year of US-made lithium carbonate, but did not disclose the start or end dates of the 10-year contract.

"Through the contract, LG Energy Solution will secure lithium carbonate produced from the South West Arkansas project located in Arkansas, thereby obtaining a key cathode material that meets non-PFE (non-prohibited foreign entity) requirements," LG Energy Solution said.

Pricing and other key commercial terms are subject to confidentiality but are structured to support anticipated financing for the project, Smackover said in a separate statement Aug. 31.

The South West Arkansas project is seeking offtake agreements totaling about 80% of the initial phase's nameplate lithium carbonate capacity of 22,500 mt/y, Smackover said.

Smackover said that its agreement with LG Energy Solution, combined with a similar deal with Trafigura, "means that roughly 90% of the total targeted offtake volume has now been committed."

Construction of the project is expected to begin after a final investment decision, enabling the first commercial production of battery-quality lithium carbonate in 2029, according to Smackover.

US PFE rules restrict certain foreign entities and their affiliates from claiming tax credits.

LG Energy Solution said securing a stable supply of locally produced cathode materials for its lithium iron phosphate batteries used in energy storage systems has become increasingly critical, as rising power demand fuels growth in the North American market.

LG Energy Solution aims for energy storage systems to account for about 40% of its global business portfolio.

The company "operates seven production facilities in the US, including three standalone sites, and most of them already have established production capacity for batteries utilizing LFP chemistry," LG Energy Solution said.

Smackover is a joint venture between Standard Lithium Ltd., through its subsidiaries, and Equinor, through its subsidiaries of Equinor ASA. Standard Lithium owns a 55% interest in the project, while Equinor holds the remaining 45%, with Standard Lithium maintaining operatorship, according to Smackover.

Platts, part of S&P Global Energy, assessed battery-grade lithium hydroxide at $19,900/mt CIF North Asia and lithium carbonate at $19,600/mt CIF North Asia on Aug. 31, both up $100/mt from Aug. 28.