LG Energy Solution on Wednesday announced that it had signed a supply deal with Australian lithium producer Wesfarmers Chemicals, Energy and Fertilisers, bolstering the supply chain of key materials for producing electric vehicle batteries within the boundaries of the United States' free trade agreement to cope with Washington’s incentive policy under the Inflation Reduction Act.

According to the announcement, the Korean battery maker will receive 85,000 tons of spodumene concentrate, a high-purity lithium ore produced as a raw material for the production of lithium-ion batteries for EVs, over the period of this year.

The company said the supply would be enough to produce batteries for about 270,000 high-performance EVs capable of driving over 500 kilometers per charge.

LG Energy Solution said it will discuss further supply contracts with the Australian partner in the future. The companies added that they are also exploring strategic opportunities for collaboration in upstream minerals and chemical processing.

The battery maker and raw materials producer previously signed a five-year offtake agreement to receive 50,000 tons of the Australian company’s battery-grade lithium hydroxide in September 2022. The delivery is slated to begin after WesCEF’s Mount Holland lithium project in Western Australia completes its construction and starts production in the first half of 2025.

The WesCEF-produced materials, which fully comply with the US government’s IRA incentive requirements, will be utilized at LG Energy Solution’s manufacturing facilities.

“As an industry leader, in line with the global trend of electrification and corresponding clean energy policies, we are upholding the value of sustainability in not just our products but every aspect of our business, including the supply chain,” said Lee Kang-yeol, senior vice president of LG Energy Solution’s procurement center.

“Partnering with major suppliers with great potentials like WesCEF, we will ensure stable procurement of key raw materials, thereby delivering advanced battery technologies at competitive prices.”