LG Energy Solution and Liontown Resources Extended Offtake Agreement to 15 years

On 2 July, LG Energy Solution (LGES) and Liontown Resources announced an enhanced long-term strategic partnership in the global lithium sector. The agreement includes a US$250 million investment by LGES in Liontown through convertible notes, extending the existing offtake agreement, and exploring the feasibility of a downstream lithium refinery.

According to the updated offtake agreement, Liontown Resources will provide over 800,000 tonnes of spodumene concentrate over the first five years and over 1.6 million tonnes over the subsequent ten years to LGES or the potential joint venture refinery, ensuring a steady supply of high-quality lithium for LGES battery production. The management team said the pricing mechanism stays unchanged and correlates with lithium hydroxide market prices based on a formula.

One of the highlights is the proposed joint venture refinery, which aims to process spodumene from Liontown's Kathleen Valley project into battery-grade lithium chemicals. Liontown emphasises that this initiative aligns with the U.S. Inflation Reduction Act's requirements for critical minerals, enhancing the product's attractiveness and competitiveness in the North American market. In addition, Liontown is still exploring the possibility of establishing a lithium hydroxide refinery in Japan with Sumitomo following the announcement in 2023.

Kathleen Valley project is expected to commence production by the end of this July. The management team says the facilities and stockpilings are ready and well-prepared for the official opening. When asked for his thoughts on lithium prices, the company CEO Tony Ottaviano asserts that the world needs diversified lithium sources which is unlikely to be solved "by bringing on African [lithium] or Chinese lepidolite as the only source of lithium". "Supply is harder to bring on than people think", he said.