LG Energy Solution signs a second offtake agreement with Wesfarmers for 85,000 tonnes of spodumene concentrate before the hydroxide supply is in place

LG Energy Solution (LGES) signed a second offtake agreement with Wesfarmers Chemicals, Energy, and Fertilisers (WesCEF) on 14 February. This agreement ensures a steady supply of lithium concentrate from WesCEF's jointly owned lithium project Mt. Holland with SQM in Western Australia. Under this new agreement, up to 85,000 tonnes of spodumene concentrate will be supplied to LG Energy Solution in 2024, enabling the production of approximately 11,000 tonnes of lithium hydroxide.

Mt. Holland itself has an integrated lithium hydroxide facility construction ongoing. In early 2023, Wesfarmers announced that the hydroxide output would be postponed to the first half of 2025, while expecting the early sale of spodumene concentrate during the 2024 calendar year to partially offset the impact of the delay. This matches with the timeframe disclosed by the announcement of LGES.

The collaboration between LGES and WesCEF dates back to 2022 when they first agreed on a five-year offtake for 50,000 tonnes of battery-grade lithium hydroxide. In the latest announcement, this initial offtake will be executed from 2026.

The second offtake could be a strategy for LGES to fortify and de-risk its supply chain in the North American market, as the Inflation Reduction Act (IRA) will unfold in the near future to exclude unqualifying suppliers.