LG Energy Solution will procure lithium hydroxide from Australia firm Infinity Lithium, the pair said on Tuesday.
The companies signed a non-binding agreement and will sign a binding offtake agreement within twelve months, they said.
The binding agreement will give LG Energy Solution first rights over the lithium hydroxide produced by the Australian company.
The South Korean battery maker is planning to procure 10,000 metric tonnes of the material per year. The pair will sign a five-year contract that can be extended another five years.
Lithium hydroxide is needed to produce battery cathodes. It can be easily synthesized with nickel and is usually used for batteries used in high-performance electric cars and energy storage systems.
Higher amount of nickel in batteries equal longer traveling distance per charge for electric cars.
Battery companies are increasing the amount of nickel they but in their cathodes. SK Innovation began producing batteries that use NCM811 cathode, which has nickel, cobalt and aluminum in 8 to 1 to 1 ratio. LG Energy Solution has been supplying its NCM811 batteries to Tesla since 2019. It is planning to begin production of NCMA (aluminum is added) batteries that has nickel account for 90% of the cathode. Samsung SDI has begun NCA cylinder batteries that has 91% nickel.
There is currently highly demand for nickel that is increasing concerns over a possible shortage of the material. According to Posco Research Institute, in 2025, supply of lithium hydroxide will reach 21 metric tonnes while demand for them will be 32 metric tonnes.
LG Energy Solution’s deal with Infinity Lithium is likely a move by the Korean firm to secure lithium supplies firsthand. Earlier this month, LG Energy Solution acquired a 7.5% stake in Queensland Pacific Metals for 12 billion won. It will procure 7,000 metric tonnes of nickel and 700 metric tonnes of cobalt from Queensland for the next ten years.
