South Korean chemical firm LG Chem said on Friday that it had acquired a stake in U.S. mining company Piedmont Lithium Inc. for $75 million in a bid to secure raw materials needed for its manufacturing of electric-vehicle (EV) batteries.
LG Chem said it also signed an agreement with the U.S. mining company to receive 200,000 metric tonnes of the high-purity lithium spodumene concentrate from NAL over a four-year period beginning from the third quarter of this year.
“This agreement allows LG Chem to provide differentiated values to North American customers with products that satisfy IRA (Inflation Reduction Act) standards by preemptively securing raw materials in the U.S., our key market,” LG Chem CEO Hak Cheol Shin said.
LG Chem expects to extract about 300,000 metric tonnes of lithium hydroxide from the spodumene concentrate supplied by NAL to produce batteries equivalent to the amount that goes into 500,000 EVs.
This makes LG Chem the first South Korean battery materials company to secure raw materials from North America. It also obtained priority negotiation rights for 10,000 tonnes of lithium hydroxide per year produced by Piedmont in the United States.
“As LG Chem has a strong commitment to U.S. electric vehicle battery manufacturing, Piedmont looks forward to discussing additional potential cooperation with LG in North America,” Piedmont Lithium CEO Keith Phillips said in a statement.
Battery Cathode Plant
LG Chem said last November that it will invest $3 billion to build battery cathode factory in Tennessee, months after the Biden administration signed into law the Inflation Reduction Act (IRA) on Aug. 16, 2022.The company said the new plant is slated to have an annual production capacity of 120,000 tonnes of cathode materials by 2027, enough to power about 1.2 million electric vehicles.
LG Chem said it was also pursuing cooperation with mining firms and recycling companies to better support its customers so that requirements of the IRA can be met.Inflation Reduction Act
Japan and South Korea earlier called on the United States to ease restrictions on EV tax credits, citing the adverse impact of the IRA on foreign automakers.The IRA, among other measures, require that at least 40 percent of the monetary value of critical minerals for batteries be from the United States or an American free-trade partner in order to qualify for U.S. tax credits.
The new law directly impacted South Korean automakers Hyundai Motor and Kia Corp, as well as Japan’s Toyota, which immediately ended credits for about 70 percent of EVs that were previously eligible for subsidies.
At the G20 summit 2022, South Korean President Yoon Suk-yeol asked President Joe Biden to prevent discriminatory measures against South Korean companies, his office said.
Biden replied that the implementation of the law should account for the contribution of South Korean investment in the U.S. economy.
Reuters contributed to this report.
