Gearing up for Battery War
LG Energy Solutions (previously LG Chem's Battery Business Division) has inked an agreement with Chilean lithium producer SQM for a stable supply of lithium for eight years.
The deal followed a comprehensive business agreement on nickel mining projects the company signed with the Indonesian government.
Industry experts view LG Energy Solutions' move as a diversification of supply sources for batteries. The company made such deals out of concern that China may use its battery raw materials as a kind of weapons when a global battery hegemony war breaks out between China's battery makers such as CATL and companies of other countries.
Under the deal, SQM will supply 55,000 tons of battery-use lithium to LG Energy Solutions between 2021 and 2029.
LG Energy Solutions also signed a business agreement with the Indonesian government on securing raw materials for batteries on Dec. 18. Details have been kept under wraps, but the agreement is aimed at promoting cooperation in mining nickel in Indonesia and building joint facilities for producing batteries for electric vehicles.
Korean battery makers have relied on China for most of the key materials such as lithium and cobalt but have recently diversified their supplying countries. If about 60 percent of new cars are replaced by electric vehicles by 2040 as industry insiders predict, stable procurement of core raw materials will determine battery makers’ future competitiveness.
Since 2005, China has invested US$144.9 billion in South America and US$272 billion in Africa under resource diplomacy aimed at securing materials such as lithium and cobalt.
The Japanese government drew up four major strategies for securing rare metals in 2009 and has since been supporting general trading companies’ development of overseas mines.
On the other hand, Korean battery companies have globally competitive technology, but their self-sufficiency in battery raw materials is quite low. Most of their raw materials are imported from China.