LG Energy Solution Signs 10-Year Lithium Carbonate Offtake Agreement in the U.S.

en.Wedoany.com Reported - On August 31, LG Energy Solution signed a binding take-or-pay offtake agreement with Smackover Lithium to procure battery-grade lithium carbonate produced from the South Arkansas project in the United States. Under the agreement, Smackover Lithium will supply LG Energy Solution with 8,000 metric tons of battery-grade lithium carbonate annually for a period of 10 years following the project's commencement of commercial production. Specific pricing and other key commercial terms were not disclosed; the Arkansas Economic Development Commission estimates the 10-year offtake commitment to be valued at approximately $1.5 billion.

This is the second commercial offtake agreement signed for the South Arkansas project. In March, Smackover Lithium signed its first binding take-or-pay agreement with Trafigura, which similarly provides for the supply of 8,000 metric tons of battery-grade lithium carbonate annually for a 10-year term following the project's commercial production. The two agreements together currently secure 16,000 metric tons of annual production. The project plans to cover approximately 80% of Phase 1's 22,500 metric tons of annual capacity through customer offtake agreements, and the two existing agreements already cover approximately 90% of the target offtake volume; Smackover Lithium continues to engage with potential customers and plans to sign one additional, smaller offtake agreement.

The South Arkansas project is being developed by Smackover Lithium. The joint venture platform was established in May 2024, with Standard Lithium holding a 55% stake and Equinor holding 45%, with Standard Lithium serving as operator. Located in southern Arkansas, the project employs direct lithium extraction technology and is designed for Phase 1 annual production of 22,500 metric tons of battery-grade lithium carbonate. The project's final feasibility study is modeled on an operating life of more than 20 years, with proven reserves of 447,000 metric tons of lithium carbonate equivalent and measured and indicated resources of 1.177 million metric tons of lithium carbonate equivalent; Phase 1 Class III capital expenditure is estimated at $1.45 billion.

Engineering and permitting work ahead of the final investment decision has progressed. In May, the U.S. Department of Energy completed its review under the National Environmental Policy Act and issued a Finding of No Significant Impact; the project had previously been awarded $225 million in funding from the U.S. Department of Energy. Smackover Lithium subsequently signed an upstream wellsite EPCM contract with Wood Group USA and a central processing facility EPCC contract with S&B Engineers and Constructors, with the scope of the central processing facility contract covering brine reception, pretreatment, direct lithium extraction, lithium chloride purification and concentration, lithium carbonate conversion, crystallization, drying, micronization, and packaging.

As of August, the project's pre-final investment decision efforts are primarily focused on two workstreams: customer offtake and project financing. Smackover Lithium previously received indications of interest from three export credit agencies for more than $1 billion in project debt financing, and related due diligence and financing procedures are still ongoing. The project plans to make its final investment decision in 2026, with formal construction scheduled to commence following a positive final investment decision, and first commercial production of battery-grade lithium carbonate targeted for 2029.