LG Energy Solution to Produce Lithium Hydroxide in Morocco to Enhance Its Global Lithium Supply Chain and Circumvent Trade Discrimination under US Inflation Reduction Act

LG Energy Solution, South Korea's largest electric vehicle battery manufacturer, said on Wednesday that it has signed a memorandum of understanding with Chinese lithium producer Yahua Group, and the two companies will jointly produce lithium hydroxide in Morocco.

According to LG Energy Solution, it is seeking to purchase lithium hydroxide from Morocco, because Morocco has signed free trade agreements with the United States and the European Union, and this means that lithium hydroxide produced in Morocco will not be subject to trade discrimination under the laws and regulations in European and the US, such as US Inflation Reduction Act (IRA) and the EU's Critical Raw Materials Act (CRMA).

LG Energy Solution further explained that the new foothold in Morocco will help strengthen the overall lithium hydroxide supply chain and allow the company to adopt more flexible responses to external factors.

According to the U.S. Inflation Reduction Act, the United States will provide tax credits for electric vehicles that use battery materials from specified origins, with subsidies of up to $7,500. Battery materials need to be produced in North America or in countries that have signed a free trade agreement with the United States.

In addition to Yahua, LGES has also signed contracts with key material producers such as Australia's Liontown Resources, Chile's SQM and Germany's Vulcan Energy to build a global lithium supply chain.