LG Energy Solution Ltd., a major global producer of lithium-ion batteries, has finalized an agreement to procure a significant amount of raw material from Smackover Lithium. The terms of the deal, announced on Monday, stipulate that LG will receive 8,000 tons of battery-grade lithium carbonate per year over a ten-year period, with deliveries commencing in 2029.
This supply agreement is a critical development for the South West Arkansas project, where Smackover Lithium (a joint venture involving Standard Lithium) aims to produce 22,500 metric tons of battery-quality lithium carbonate annually. The project has an estimated total capital expenditure of $1.45 billion and robust project economics, including an unlevered pre-tax net present value of $1.7 billion and an internal rate of return of 20.2%.
The South West Arkansas project is targeting initial production in 2028 and is poised to become the first commercial lithium production in the Smackover Formation using Direct Lithium Extraction (DLE) technology. This deal with LG Energy Solution further validates the project's potential and contributes to establishing a domestic supply chain for critical battery materials in the United States, supporting the burgeoning electric vehicle and energy storage sectors.
