South Korea’s LG Energy Solution has entered into a six-year agreement with an Australian mining company for cobalt and nickel, securing a stable supply of key minerals to make electric vehicle batteries.
LG Energy, a subsidiary of LG Chem, will purchase 71,000 dry metric tons of nickel and 7,000 dry metric tons of cobalt from Australian Mines Limited starting from the end of 2024. That’s enough raw material to make batteries for 1.3 million EVs with a driving range of over 310 miles per charge.
“Securing key raw materials and a responsible battery supply chain has become a critical element in gaining a greater control within the industry, as the demand for electric vehicles worldwide heightened in recent years,” LG Energy Solution CEO Jong-hyun Kim said in a statement.
The materials will be sourced from Australian Mines’ $1.5 billion Sconi Project based in Queensland, which is currently under development. The site will use a “dry stacking method” to store filtered tailings, an alternative and more eco-friendly way to manage waste from a mining site. Instead of dumping tailings into local water sources or burying them in underground quarries, dry stacking removes the water from the waste, leaving a sand-like substance that can be securely stored in management facilities.
“Although more costly compared to the conventional method due to construction and maintenance expenses, the dry stacking method is deemed an environmentally friendly way to extract raw materials,” LG Energy said in a statement.
The sole condition to the agreement is that Australian Mines secure financing for the construction of the project before the end of June next year. If secured, the agreement would account for all of the anticipated output of the site.
The two companies have the option to extend the agreement by another five years by mutual agreement.
LG Energy is a subsidiary of LG Chem, one of the world’s largest producers of batteries and battery materials. Last month, the company said it had earmarked ?6 trillion ($5.2 billion) in its battery businesses, specifically the production of anode materials, separation membranes and cathode binders. Earlier this summer, it also entered into an agreement with Queensland Pacific Metals valued at ?12 billion ($10.3 million), for 7,000 tons of nickel and 700 tons of cobalt per year over a 10-year period.
LG Chem counts Volkswagen, General Motors and Tesla amongst its customers. It said it anticipates the global battery market only expanding in the coming years, from ?39 trillion ($34 billion) in 2021 to ?100 trillion ($87 billion) by 2026.
It isn’t the only major player vying to secure sources of raw materials. In a move to obtain its own battery source, Tesla inked a deal with commodity production giant BHP in July for nickel from its mines in Western Australian.