LG Energy Solution Secures Nickel & Cobalt Deal with Australian Miner

LG Energy Solution Secures Cobalt and Nickel Supply from Australian Mines

LG Energy Solution, a prominent South Korean battery manufacturer, has formalized a six-year supply agreement with an Australian mining firm to guarantee a consistent flow of essential minerals used in electric vehicle (EV) battery production.

Agreement Details

Beginning in late 2024, LG Energy, a division of LG Chem, will procure 71,000 dry metric tons of nickel and 7,000 dry metric tons of cobalt from Australian Mines Limited.

This quantity of raw materials is sufficient for the manufacture of batteries capable of powering 1.3 million EVs, each offering a driving range exceeding 310 miles on a single charge.

Strategic Importance of Raw Material Security

“The acquisition of vital raw materials and the establishment of a responsible battery supply chain are now paramount for achieving greater industry control,” stated Jong-hyun Kim, CEO of LG Energy Solution. “Global demand for electric vehicles has significantly increased in recent years, making this step crucial.”

Sconi Project and Sustainable Mining Practices

The sourced materials will originate from Australian Mines’ Sconi Project, a $1.5 billion undertaking currently in development within Queensland, Australia.

The project will employ a “dry stacking method” for tailings management. This innovative approach represents a more environmentally sound alternative to traditional methods.

Instead of disposing of tailings in water bodies or underground, dry stacking extracts water, resulting in a sand-like material suitable for secure storage in dedicated facilities.

Environmental Considerations

While the dry stacking method incurs higher costs due to construction and upkeep, LG Energy recognizes it as an ecologically preferable method for raw material extraction.

Conditions and Extension Options

The agreement is contingent upon Australian Mines securing the necessary financing for project construction by the end of June of the following year. Upon fulfillment of this condition, the agreement will encompass the entirety of the site’s projected output.

Furthermore, both companies retain the option to extend the agreement for an additional five years through mutual consent.

LG Energy’s Broader Investment Strategy

LG Energy, as a subsidiary of LG Chem – a leading global battery and materials producer – recently allocated ₩6 trillion ($5.2 billion) to its battery-related businesses.

These investments will focus on the production of anode materials, separation membranes, and cathode binders.

Earlier this year, the company also established a ₩12 billion ($10.3 million) agreement with Queensland Pacific Metals for the annual supply of 7,000 tons of nickel and 700 tons of cobalt over a decade.

Key Customers and Market Outlook

Volkswagen, General Motors, and Tesla are among LG Chem’s prominent clientele.

The company forecasts substantial growth in the global battery market, projecting an increase from ₩39 trillion ($34 billion) in 2021 to ₩100 trillion ($87 billion) by 2026.

Industry Trend: Securing Raw Material Sources

LG Energy is not alone in its pursuit of securing raw material supplies. Tesla, in July, entered into a deal with BHP, a major commodity producer, to obtain nickel from its Western Australian mines.