LGES purchases more lithium from Liontown Resources

LG Energy Solution has entered into an extensive strategic partnership with the Australian lithium supplier Liontown Resources. The partnership involves a further supply of lithium spodumene and a possible lithium refinery from the two companies.

The new agreement includes an extended offtake agreement for the supply of lithium spodumene from the Kathleen Valley mine. Specifically, the existing offtake agreement, which has a term of five years, will be extended by a further ten years. According to the announcement, Liontown will supply a total of 700,000 tonnes of spodumene concentrate in the first five years and 1.5 million tonnes in years six to 15. “his extension also includes a commitment to make up to 250kt spodumene concentrate available over the first ten years,” said LGES.

The new deal also includes a USD 250 million investment by LGES in Liontown. It will be in the form of convertible bonds. The fresh capital will be used to expand production in Kathleen Valley to meet the new supply volumes.

The third point is a “Downstream collaboration agreement to commence feasibility studies to establish an IRA-compliant lithium refinery, aimed at processing spodumene from Kathleen Valley into battery-grade lithium chemicals,” as the Korean company puts it. In other words, LGES and Liontown are examining the possibility of building a joint plant to refine lithium podumen into battery-grade materials. However, the construction of such a refinery has not yet been finalised.

Liontown’s customers include Ford and Tesla. As one of the major cell manufacturers, LG Energy Solution has a broader base when it comes to lithium procurement. For example, the Korean company has purchase agreements with WesCEF, SQM, GT1 Lithium, Snow Lake Resources and Avalon Advanced Materials – some of which are still non-binding agreements.

“The agreement represents another significant step in our value chain investment strategy aimed at enhancing its resilience to market uncertainties.,” says LGES CEO David Kim. “By partnering with strong players like Liontown, we will continue to secure stable supply of IRA-compliant critical minerals, fulfilling our efforts to provide competitive power solutions for electrification.”

Tim Goyder, Chairman of Liontown Resources, added: “Liontown is very pleased to formalise this strategic partnership with LG Energy Solution, one of the world’s leading battery producers, marking a significant milestone in our journey towards becoming a globally significant supplier of battery minerals as the world transitions to a low-carbon future. This partnership and investment is consistent with our downstream refining strategy to capture the value of vertical integration and deliver substantial value to our shareholders and key stakeholders over the long term.”

lgcorp.com, ltresources.com.au (PDF)