South Korean battery manufacturer LG Energy Solution Ltd (LGES) announced that it has signed a binding agreement with US-based Smackover Lithium to source lithium carbonate for its battery manufacturing operations in the US.

Under the contract, Smackover Lithium, a partnership between Standard Lithium Ltd and international energy company Equinor, will supply LGES with 8,000 metric tonnes of battery-grade lithium carbonate annually over a ten-year period following the start of commercial production.

LGES noted that by sourcing US-produced lithium carbonate, the company is able to establish “a fully integrated local supply chain, from sourcing to production,” adding that Smackover’s direct lithium extraction (DLE) and purification processes will also “ensure more sustainable sourcing of the key battery material.”

Rising demand from the energy storage systems (ESS) sector is driving up overall demand for batteries in the region, offsetting sluggish demand from the automotive sector after the US government withdrew tax incentives for the purchase of battery electric vehicles (BEVs) almost a year ago.

LGES confirmed that because of rising ESS demand, it has become “ever more critical for battery manufacturers to secure a stable supply of locally produced cathode materials for their ESS lithium-iron-phosphate (LFP) batteries.”

LGES operates seven battery production facilities in the US, including three standalone plants and four joint venture plants, most of which have the capacity to produce LFP batteries. It pointed out that “by combining our strong US manufacturing footprint with Smackover Lithium’s lithium carbonate, we have secured a fully integrated local supply chain from sourcing to production.”

The lithium carbonate will be produced at Smackover’s South West Arkansas (SWA) Project located in Arkansas, allowing LGES to obtain a key cathode material that meets the US’ non-prohibited foreign entity (PFE) requirements.

LGES’ head of procurement, Kang Yeol Lee, said in a statement: “We are pleased to begin this partnership with Smackover Lithium and the agreement marks another step toward establishing a solid and resilient supply chain that keeps our products competitive in key strategic markets. By bringing both battery production and sourcing to the US, we will deliver competitive and sustainable products to our customers, driving the global ESS and EV markets.”