LG Energy Solution is moving further to localize critical-mineral sourcing in North America, signing a long-term lithium supply agreement with a U.S. developer as it gears up for growing demand from electric vehicles (EV) and energy storage systems (ESS).

The company announced Tuesday that it has signed a 10-year agreement to secure lithium carbonate from U.S.-based lithium developer Smackover Lithium.

Under the deal, LG Energy Solution will receive a total of 80,000 metric tons of lithium carbonate over 10 years, with deliveries beginning in 2029 — the year Smackover Lithium is expected to start commercial production. According to the company, that volume is sufficient to produce batteries for roughly 1.8 million high-performance EVs offering a range of more than 500 kilometers on a single charge.

"The agreement marks another step toward establishing a solid and resilient supply chain that keeps our products competitive in key strategic markets," said Lee Kang-yeol, head of LG Energy Solution's procurement center. "By bringing both battery production and sourcing to the United States, we will deliver competitive and sustainable products to our customers, driving the global energy storage and EV markets."

Smackover Lithium is a joint venture between U.S. lithium developer Standard Lithium and Norway's state-owned energy company Equinor. The venture plans to produce lithium carbonate at its South West Arkansas Project using direct lithium extraction technology, a process that extracts lithium from underground brine while reducing the environmental footprint associated with conventional extraction methods. The project sits within the Smackover region of southern Arkansas, an area long known for its brine resources from historic oil and gas operations, which has drawn growing interest as a potential domestic lithium source.

Lithium carbonate is a key raw material for lithium iron phosphate (LFP) and nickel-cobalt-manganese batteries. Demand for the material is expected to rise as battery makers expand LFP production, particularly for ESS applications. Most lithium refining today is concentrated in a small number of countries, a supply structure that has prompted battery makers worldwide to diversify their sourcing.

LG Energy Solution said the agreement will help it secure a stable supply of U.S.-produced lithium while strengthening its competitiveness in the North American battery market, where it currently operates or is developing eight production facilities.

The company also expects the local sourcing arrangement to help it comply with critical-mineral sourcing requirements under the U.S. Inflation Reduction Act. Under the law, EVs qualify for federal tax credits only if a specified share of their battery critical minerals is extracted, processed, or recycled in the United States or countries with which it has a free trade agreement, a rule that has reshaped sourcing strategies across the battery industry.

Beyond the United States, LG Energy Solution has secured lithium supplies through partnerships with major producers in other resource-rich countries. It has signed long-term agreements with Chilean lithium producer SQM for 100,000 tons of lithium hydroxide and lithium carbonate, and with Australia's Liontown for 1.75 million tons of lithium concentrate.

Source: The Korea Times