Smackover Lithium, a partnership between Standard Lithium Ltd. and Equinor ASA, has reached a 10-year, take-or-pay agreement with LG Energy Solution, a global manufacturer of lithium-ion batteries for electric vehicles and energy storage systems.
Under the agreement, the South West Arkansas Project will supply LG Energy Solution with 8,000 metric tonnes of battery-quality lithium carbonate annually. The deal is estimated to be worth $1.5 billion over the 10-year period following the start of commercial production.
David Park, CEO of Standard Lithium, said the agreement brings the project closer to securing the customers needed to advance its financing plans.
“We are excited to be entering into this Agreement with LG Energy Solution, one of the world’s leading battery producers with a diverse and global customer base and a presence in many dynamic and growing industry segments. The Agreement further anchors our customer offtake portfolio, complementing the contract with Trafigura we announced in March of this year, and is another major milestone in the development of the SWA Project. We have now secured a vast majority of the offtake agreements needed to move forward with our Project financing plans and a Final Investment Decision. We expect this to be the beginning of a long and mutually beneficial partnership whereby we will provide LG Energy Solution with a long-term supply of U.S.-based and sustainably produced battery-quality lithium carbonate.”
LG Energy Solution Procurement Center Leader Kang Yeol Lee said the agreement will help establish a U.S.-based supply chain for the company’s products.
“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,” said Kang Yeol Lee, procurement center leader of LG Energy Solution. “By bringing both battery production and sourcing to the U.S., we will deliver competitive and sustainable products to our customers driving the global energy storage and EV markets.”
The LG agreement follows a previously announced deal with Trafigura for another 8,000 metric tonnes of lithium carbonate annually over 10 years. Combined, the two agreements account for roughly 90% of the project’s targeted offtake volume.
The project’s initial phase is designed to produce 22,500 metric tonnes of lithium carbonate annually. Smackover Lithium is seeking agreements covering roughly 80% of that capacity and said it remains in discussions with additional potential customers.
The offtake agreements are being pursued alongside financing efforts for the project. Smackover Lithium previously reported indications of interest for more than $1 billion in project debt from three major Export Credit Agencies, with due diligence underway.
The partnership is targeting a Final Investment Decision this year, with construction planned to begin after that decision. If the timeline holds, the project is expected to begin commercial production of battery-quality lithium carbonate in 2029.
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