Australian Mines Limited (ASX: AUZ) has announced that it has entered into a binding offtake agreement with LG Energy Solution (LGES) for the supply of a mixed nickel-cobalt hydroxide product from the company’s Sconi Project in North Queensland.
The agreement will see LGES purchase 71,000 dry metric tonnes of nickel and 7,000 dry metric tonnes of cobalt during the initial term of the agreement, supplied as a mixed hydroxide precipitate (MHP).
MHP is an intermediate product that is used in the manufacture on lithium-ion batteries.
“the six-year deal would supply enough raw material to produce battery power for 1.3 million electric vehicles”
The initial term will commence on or before the 1st of July 2024, and will stretch for six years with potential to extend for a further five years upon mutual agreement.
The offtake agreement includes a condition precedent that AUZ must secure project funding on or before the 30th of June 2022 unless otherwise agreed by both parties.
The contract will account for 100% of projected future output of the Sconi Project, in a move that the company describes as providing a “sound customer foundation to underpin its development”.
LGES secures critical supply for EV battery manufacture
LG Energy Solution, a subsidiary of LG Chem, is the world’s largest manufacturer of advanced batteries for the EV industry, mobility & IT applications, and energy storage systems.
The company has said that the six-year deal would supply enough raw material to produce battery power for 1.3 million electric vehicles, with an average driving range in excess of 500km per charge.
President and CEO of LG Energy Solution Jong-hyun Kim said: “Securing key raw materials and a responsible battery supply chain has become a critical element in gaining a greater control within the industry, as the demand for electric vehicles worldwide heightened in recent years. LGES will solidify its position as the world’s leading battery manufacturer through a steady supply of raw materials for EV batteries.”