South Korea’s top pure-play battery maker LG Energy Solution Ltd. has inked a contract to purchase 700,000 dry metric tons of lithium spodumene concentrate from Austrian miner Liontown Resources Ltd. in a preemptive action to secure stable supply of the key ingredient for electric vehicle batteries amid soaring prices from ever-rising demand.

Under an offtake agreement, LG Energy Solution will receive the lithium spodumene concentrate supply from 2024 to 2028, according to industry sources on Wednesday.

The 700,000 dry metric tons of lithium spodumene concentrate is equivalent to producing 100,000 tons of lithium hydroxide, a key raw material with growing demand for easy mix with nickel for high-performance battery production. The supply will allow the company to make batteries that can power 2.5 million electric vehicles, running more than 500 kilometers on single charge.

Korean EV battery makers currently get 83.5 percent of their lithium hydroxide needs supplied from China, according to the Korea International Trade Association.

It reportedly is the first time for LG Energy Solution to sign lithium spodumene purchase contract with an Australian miner.

For nickel, the Korean battery maker has secured 20,000-ton supply through Ultium Cells, a 50:50 joint venture with American automaker General Motors that signed a deal with Canadian lithium-ion battery resource recovery company Li-Cycle.

On Wednesday, shares of LG Energy Solution’s parent LG Chem Ltd. gained 5.31 percent to close at 773,000 won. LG Energy Solution is scheduled to join the Kospi this month.

By Pulse

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