Chile’s SQM said on Tuesday it had inked a long-term agreement with LG Energy Solution to supply the South Korean battery maker with ultralight metal lithium, a main ingredient in powering electric vehicles.
SQM, the world’s No.2 producer of lithium, said the contract would run between 2021 and 2029 and involves the supply of approximately 55,000 metric tons of lithium carbonate equivalent, SQM said in a statement.
Pablo Altimiras, who oversees SQM’s lithium business, said the deal demonstrated confidence in the quality of the company’s product.
“These are long-term contracts that point to SQM’s stability,” Altimiras said, adding that the company would continue seeking out such deals in the future.
South Korea’s LG Chem, an electric car battery supplier for Tesla Inc and GM, said in September that it would separate its battery making business into a new company – LG Energy Solution – to meet growing demand from European car makers and increasing sales of cylindrical batteries used in Tesla cars.
Car and battery makers in the United States, Europe and China are scrambling to lock down supplies of lithium ahead of an anticipated boom in demand for electric vehicles.
Many miners had moved to boost output ahead of the rush, but the COVID-19 pandemic largely temporarily slammed the brakes on the electric vehicle revolution, driving down prices, denting profits and forcing many companies to shelve expansion plans.
In November, SQM nonetheless said its plans to boost its production of lithium carbonate and lithium hydroxide by the second half of 2021 were still on track.
SQM also plans to increase its production capacity to 180,000 and 30,000 metric tons of lithium carbonate and lithium hydroxide, respectively, by 2023.
(By Fabian Cambero, Aislinn Laing and Dave Sherwood; Editing by Jason Neely and Grant McCool)