SQM (Sociedad Química and Minera de Chile) has entered into a long-term agreement to supply lithium products to LG Energy Solution, the recently independent battery division of LG Chem. The contract is expected to run through 2029.
Under the agreement that runs from 2021 to 2029, SQM will supply lithium hydroxide and lithium carbonate to the Korean company. The order volume is reported to be approximately 55,000 metric tons of lithium carbonate equivalent (LCE).
This will make LG Energy Solutions (LGES) by far the Chilean company’s most important customer. According to Green Car Congress, SQM has a production capacity of 70,000 tons per year. As things stand, therefore, just under 80 per cent of annual production goes to LGES, but the capacity can, of course, be expanded over the term of the agreement, which would reduce LG Energy Solutions’ share.
SQM calls the agreement an important milestone for SQM, “not only as part of its growth strategy,” but because it also solidifies its position as a supplier of high-quality cathode materials for electric car batteries. SQM is among Chile’s largest lithium producers, and Chinese group Tianqi has had a stake in SQM since 2018.
SQM extracts its lithium and potassium products from the brine of the Salar de Atacama. The saline brine is pumped from depths of 1.5 to 150 meters into extraction basins for the lithium. The extraction itself takes place in a multi-stage evaporation and purification process.
LG Chem only completed the spin-off of its battery division in December, and since then LG Energy Solutions has been operating as an independent company. The new company employs about 22,000 people, including about 7,000 in South Korea and 15,000 in other countries. The division has grown strongly with demand for batteries – not only for electric cars but also for mobile devices such as smartphones. This business has also been very profitable, so the group believes the division is better positioned independently.
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