LG Chem CEO Shin Hak-Cheol has stated that the company will prioritise reliable long-term offtakes of battery metals over pricing as concerns over supply volumes continue to trouble the industry.

LG Chem CEO Shin Hak-Cheol has stated that the company is looking to secure long term stable supplies of battery metals for its cathode active material sector and will prioritise reliable supply over pricing. While the company is not looking to become directly involved in the mining sector, the CEO did indicate that if a mining project were to fulfil specific criteria, the company may consider investment. This would likely be via indirect means.

Both battery metals producers and industry commentators have been asserting the need for increased investment in supply chains. Whether this be from downstream players or at the national level. Recently, the industry has seen examples of OEM’s looking to take an active role in securing metal supplies, such as GM’s US$650M equity investment in Lithium Americas’ Thacker Pass project. However, LG Chem appears to be less inclined to become directly involved in the development of mining operations, and more likely to secure supply via long term offtakes with multiple partners. Given the significant investments required to develop the necessary volumes of battery metals required for the energy transition, this investment will likely need to come from a variety of sources. This includes private investment, downstream OEM’s funding new projects, and government level incentive schemes for battery metal supply routes.

One of the largest government level incentive schemes so far put in place is the United States’ Inflation Reduction Act (IRA). One of the primary aims of the legislation is to develop domestic sources of materials vital to the energy transition for the US. However, Shin has stated that more clarity on the stated policies is needed due to the changing landscape of the battery metals industry. Currently, the IRA states that customers in the United States are eligible for a US$7,500 tax credit when purchasing an electric vehicle. However, in order to qualify for this, companies must source their materials from countries with a free trade agreement with the US. Given the battery metals sector is an emerging and dynamic market, there is a possibility that, in future, larger shares of supply will originate from countries which do not have this agreement in place.