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October 5, 2021updated 15 Feb 2022 3:00am

Sigma Lithium agrees supply to LG Energy Solution

Deal locks in a quality supply of lithium for a major EV battery maker.

By Graeme Roberts

Sigma Lithium announced the signing of a binding term sheet for an offtake agreement on a ‘take or pay’ basis for the sale of 6% battery-grade lithium concentrate to LG Energy Solution.

The six-year offtake deal scales from 60,000 tons per year in 2023 to 100,000 tons from 2024 to 2027 subject to Sigma Lithium and LGES executing mutually acceptable definitive documentation to implement the offtake.

Sigma Lithium and LGES also agreed to negotiate each year, starting in 2022, an additional optional supply of lithium not otherwise committed in other arrangements.

The purchase price under the offtake will be linked to market prices during the term of the offtake.

The pfftake is intended to be legally binding on both Sigma Lithium and LGES, and is subject to, among other things, completion of the negotiation of definitive written agreement(s), which are to be consistent with the agreed terms contained in the binding term sheet.

“With the rapid growth of the EV battery market, securing large volumes of environmentally sustainable and high quality lithium materials is becoming one of the important sources of competitiveness in our industry,” said Dong Soo Kim, senior VP of procurement centre at LG Energy Solution. “We are delighted to sign this landmark offtake with Sigma Lithium, sourcing environmentally-friendly battery-grade sustainable lithium concentrate directly from the upstream producer and collaborating to make our battery supply chain increasingly more sustainable through our shared focus on innovation and ESG.”

“Since 2018, Sigma Lithium has been producing battery grade sustainable lithium concentrate at its on site demonstration pilot plant,” said Ana Cabral-Gardner, Co-CEO, Sigma Lithium. “We believe this offtake will create long-term value for all of our stakeholders. Sigma Lithium has been able to deliver large samples of one of the purest, most environmentally and socially sustainable lithium concentrates in the marketplace to potential customers. Thus, our focus on sustainability and the investments we made in our assets to develop an environmentally friendly process to produce battery grade sustainable lithium concentrate, enables Sigma Lithium to attain a leading industry position, supplying LG Energy Solution, the largest global producer of advanced batteries for electric vehicles and green energy storage.

“This offtake is perfectly aligned with our strategy of creating direct commercial relationships with the largest Tier 1 battery producers, providing stability to our future cash flows.

“We believe that sustainable, scalable and reliable production of high quality lithium will be essential to meeting demand from sustainable energy leaders like LGES.”

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