De-Risking From China: LG Energy Solution Secures US Lithium Supply Through 2039

[Korea Financial Times, Kim JaeHun] LG Energy Solution has signed a long-term lithium carbonate supply agreement with a US lithium company. As the "de-China" trend intensifies in the energy storage system (ESS) market, the move is aimed at upgrading the company's localized system spanning raw material sourcing to battery production.

LG Energy Solution plans to secure product competitiveness through local production and raw material sourcing, accelerating its expansion in the US ESS market.

LG Energy Solution Builds Lithium Sourcing System in the US

LG Energy Solution announced on September 3 that it has signed a long-term lithium carbonate supply agreement with Smackover Lithium of the United States. Smackover Lithium is a joint venture between Standard Lithium, a US lithium development specialist, and Equinor, Norway's state-owned energy company.

Under the agreement, LG Energy Solution will receive a total of 80,000 tons of lithium carbonate over 10 years, starting in 2029 when Smackover Lithium begins full-scale production. This volume is enough to produce approximately 1.8 million high-performance electric vehicles capable of traveling more than 500 km on a single charge.

Smackover Lithium plans to apply Direct Lithium Extraction (DLE) technology to its South West Arkansas Project in Arkansas, producing high-quality lithium carbonate in an eco-friendly manner that minimizes carbon emissions.

The agreement comes as the ESS market has rapidly expanded amid rising electricity demand in North America, making the establishment of a local supply chain for key battery cathode materials such as LFP a critical task. It is a preemptive response to surging demand for lithium carbonate.

Lithium is a core mineral for battery cathode materials, with more than half of global production concentrated in China. As the US-China trade conflict has intensified restrictions on Chinese-made raw materials, diversifying lithium supply chains has become a key challenge for battery manufacturers.

Lithium carbonate is primarily used as a core raw material in LFP and NCM (nickel-cobalt-manganese) batteries. Together with lithium hydroxide—mainly used in high-performance NCM (high-nickel) batteries—it is considered a key mineral driving the electric vehicle and energy transition markets.

An LG Energy Solution official said, "By securing a stable local supply chain in the US that applies an eco-friendly method based on Direct Lithium Extraction (DLE) technology, we have met the requirements to benefit from the Inflation Reduction Act (IRA)." The official added, "This will allow us to simultaneously strengthen our supply chain competitiveness and ESG competitiveness in the North American market."

Localization from Raw Material Sourcing to Production

Through this lithium supply agreement, LG Energy Solution has further strengthened its complete supply chain system—from local raw material sourcing in the US to battery production. The company currently operates eight production facilities in North America.

Since its founding, LG Energy Solution has built economies of scale through early investment in North America, including establishing battery production bases. Among Korea's three battery makers—LG Energy Solution, Samsung SDI, and SK On—it has built the largest number of production sites in North America.

Through this, the company plans to expand its order competitiveness not only in EV batteries but also in the rapidly growing ESS battery market. LG Energy Solution is also securing production flexibility by converting some EV battery lines at its North American production sites into LFP (lithium iron phosphate) battery lines for ESS use.

Beyond this agreement, LG Energy Solution has been actively expanding strategic partnerships with leading companies in major mineral-producing countries around the world to build a stable raw material supply chain.

Earlier, the company signed a long-term supply agreement for 100,000 tons of lithium hydroxide and lithium carbonate with Chile's SQM, the world's largest lithium producer. It has also signed a supply agreement for 1.75 million tons of lithium concentrate with Australia's Liontown, continuing diversified raw material cooperation with major lithium companies.

David Park, CEO of Standard Lithium, said, "It is truly meaningful to sign this agreement with LG Energy Solution, a world-class battery manufacturer." He added, "We expect to build a solid partnership for mutual growth by providing LG Energy Solution with a long-term, sustainable supply of US-made lithium carbonate."

Kim JaeHun (rlqm93@fntimes.com)