As a result of unprecedented economic conditions, South Korean battery manufacturer LG Energy Solution Ltd. (LGES) is reportedly reevaluating a $1.3 billion investment plan for a factory in Arizona.
In response to the soaring demand for electric vehicles across the United States, LG Energy Solutions announced that it would construct a $1.4 billion battery production facility in Arizona three months ago. LG Energy Solutions provides electric vehicle batteries to a variety of EV makers, including Tesla.
In a statement, LGES noted that it is currently reviewing various investment options due to the “unprecedented economic conditions and investment circumstances in the United States.” The battery maker did not specifically mention its plans for the Arizona plant, but an LGES spokesperson stated that the company would be reevaluating its investment in the facility.
LG also noted in a separate regulatory filing that it had been reviewing the timing, size and details of its investment in Arizona because of the worsening global economic environment. However, the company noted in the filings that nothing has been decided yet.
LG Energy Solution also revealed that it had entered into a non-binding Memorandum of Understanding (MoU) with Compass Minerals, a well-known supplier of vital minerals needed to produce battery-grade lithium.
According to the provisions of the MoU, Compass Minerals would provide lithium hydroxide and carbonate to LGES. Starting in 2025, Compass Minerals will supply LG Energy Solution with up to 40% of its annual phase-one lithium carbonate and lithium hydroxide production for seven years.
To reach a legally enforceable supply agreement, LGES and Compass Minerals have agreed to conduct further good-faith negotiations. Dongsoo Kim, Senior Vice President of Procurement Center at LG Energy Solution, issued a statement about the deal.
“Securing key raw materials has become critically important to maintain our leadership position in the global battery market. LGES will make sure to support the establishment of a steady supply chain in North America while it continues to seek and acquire environmentally friendly produced battery-grade lithium worldwide,” Kim said.
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