Piedmont Lithium (ASX:PLL) reports that it has signed an equity investment and binding offtake agreement with global chemical company LG Chem.
Under this agreement, LG Chem will make a $75 million equity investment in Piedmont and commit to the offtake of 200,000 tonnes of spodumene concentrate from the North American Lithium Project in Canada over a 4-year term.
The company says LG Chem will purchase over 1.096 million newly issued shares of Piedmont common stock at a price of $68.40 per share for a total consideration of $75 million. Closing of the Subscription Agreement is expected on or around 24 February 2023, and will result in LG Chem holding about 5.7% of Piedmont common shares.
“LG Chem is a global leader with a commitment to US EV battery manufacturing and plans to build one of the world’s largest cathode plants in Clarksville, Tennessee”
Piedmont has also agreed to supply LG Chem with 50,000 tonnes per year of SC6 for 4 years with planned shipments beginning in Q3 2023. It reports SC6 pricing will be determined by a formula-based mechanism linked to SC6 market prices at the time of each shipment.
LG Chem will utilise the material to support its plans to produce cathode materials for key North American customers as well as the intentions of the Inflation Reduction Act of 2022 (IRA). Piedmont reports it has also agreed to provide LG Chem priority negotiation rights for 10,000 metric tonnes per year of lithium hydroxide produced by Piedmont at either its proposed facilities in Tennessee or North Carolina.
Commenting on the agreement, Piedmont Lithium Chief Executive Officer Keith Phillips said: “We welcome LG Chem as a shareholder in Piedmont and are excited to partner with them to supply North American lithium that will meet the requirements of the IRA and support the development of the US battery supply chain.
LG Chem is a global leader with a commitment to US EV battery manufacturing and plans to build one of the world’s largest cathode plants in Clarksville, Tennessee. We look forward to working with LG Chem as NAL (North American Lithium) comes online as an important source of lithium in North America.”
Also commenting on the agreement, LG Chem Vice Chairman and CEO Hak-Cheol Shin says: “This agreement allows LG Chem to provide differentiated values to North American customers with products that satisfy IRA standards by pre-emptively securing raw materials in the US, our key market.
As we work to build various partnerships, including joint metal investments with automotive OEMs and battery makers, we’re pleased that our partnership with and commitment to Piedmont will help support its development of US lithium projects.”
The North American Lithium Project is a joint venture (JV) between Piedmont and Sayona Mining (ASX:SYA), named Sayona Quebec. Piedmont expects SC6 production to restart in the first half of 2023, with commercial shipments expected to begin in Q3 2023.
The company’s offtake agreement with Sayona Quebec entitles it to purchase the greater of 113,000 tonnes per year of 50% of the JV’s SC6 production. Piedmont purchases of SC6 are subject to a floor price of $500 per ton and a ceiling price of $900 per ton for the life-of-mine term.
Piedmont intents to utilise the funding from LG Chem to advance its portfolio of projects, including its planned 30,000 tonnes per year lithium hydroxide project at Tennessee Lithium, the Ewoyaa Lithium Project in Ghana in partnership with Atlantic Lithium, and the fully integrated Carolina Lithium Project in development in North Carolina. The funds will also be used for general corporate purposes.
LG Chem is a global chemical company with a diversified business portfolio in the key areas of petrochemicals, advanced materials, and life sciences. The company manufactures a wide range of products including petrochemicals, renewable plastics, electronic and battery materials, as well as drugs and vaccines.
Piedmont Lithium is a multi-asset integrated lithium business focused on enabling the transition to a net-zero world. The company’s goal is to become one of the largest lithium hydroxide producers in North America by processing spodumene concentrate produced from its projects in North America and Ghana.
