Invest2 publishersIndependently confirmed2 min readPublished
LG Energy buys four years of Canadian lithium it can steer to storage cells or car batteries
LG Energy Solution will buy 240,000 tons of lithium concentrate from Canada's Elevra Lithium over four years, starting late this year. According to Seoul Economic Daily, the material can be refined for LFP storage cells or high-nickel car batteries, so LG can choose the market later.
The Investor · Invest desk
What happened
- Elevra will produce the concentrate at the North American Lithium mine it operates in Quebec, according to Seoul Economic Daily.
- The material will go first to LG's North American production sites, Seoul Economic Daily reported.
- Battery makers have chased more energy storage contracts to offset weak EV battery demand during a prolonged downturn in the electric vehicle market, Yonhap reported.
- Wood Mackenzie expects the US energy storage market to grow fourfold by 2031, reaching 499 GWh, according to Yonhap.
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Why it matters
- decision Each year's roughly 60,000 tons has to be refined into carbonate or hydroxide, so the split between storage cells and car batteries becomes an annual call LG can make as orders arrive.
- exposure The reports include no price, so investors cannot yet tell whether LG fixed its lithium cost for four years or only its supply.
- exposure Honda and General Motors share LG's exposure to storage demand, since their joint-venture plants in Ohio and Tennessee count toward its LFP capacity build.
Seoul Economic Daily converted the 240,000 tons into roughly 30,000 tons of lithium hydroxide, enough for batteries in 700,000 high-performance electric vehicles [6]. That implies eight tons of concentrate per ton of hydroxide [14]. Spread over four years, the deal delivers about 60,000 tons of concentrate a year [15], roughly 7,500 tons of hydroxide [16] and batteries for 175,000 cars [17].
The unit is the puzzle. According to the same report, hydroxide goes into high-nickel ternary batteries, while lithium carbonate goes into LFP and ternary cells [8]. LG explained the deal in terms of storage. "This agreement marks another important step in strengthening our raw material supply chain in North America and supporting the region's rapidly growing ESS market," Lee Kang-yeol, head of LG's procurement center, said, according to Yonhap [4]. LG plans more than 50 GWh of LFP cell capacity in North America by December, at three wholly owned plants in Michigan and Ontario and at joint ventures with Honda in Ohio and General Motors in Tennessee [10]. LFP cells take carbonate [8].
The plain reading is that LG is lining up feedstock for those LFP lines and the hydroxide figure was just the newspaper's yardstick. A second reading is that the contract is an option on chemistry. Seoul Economic Daily said it gives LG a supply chain that can adjust output of carbonate and hydroxide as demand for electric vehicles and storage shifts [9]. Lee said the company will "improve the stability and flexibility of our supply chain and respond more quickly to customer demand" [5]. A third reading, the weakest on this evidence, is that most of the volume ends up as hydroxide for car batteries, with the 700,000-vehicle figure as its only support [6].
I think the second reading is closest. Wood Mackenzie's fourfold forecast implies a US storage market starting from roughly 125 GWh [18]. That makes storage the growth side, while the car side is in a prolonged downturn [11]. A concentrate contract commits LG to tonnage without committing it to a salt. The counter-case is timing: the first deliveries are due late this year [1], just as the December LFP capacity is supposed to come online [10], and those lines need carbonate. If LG's later disclosures show the Elevra tonnage going overwhelmingly into carbonate for LFP, the deal is a straightforward storage supply contract and this view is wrong.
LG is committing to buy volume, and the spending at the mine stays with Elevra. Lucas Dow, Elevra's chief executive, said the company will push ahead with production expansion on the basis of the LG partnership, according to Seoul Economic Daily [13].
What to watch
- How LG splits the Elevra tonnage between carbonate for LFP lines and hydroxide for high-nickel cells, and who refines it.
- Whether LG actually has more than 50 GWh of LFP capacity running in North America by December.
- Whether Elevra's planned expansion at the Quebec mine produces volume beyond what LG has contracted.