LG Energy Solution signs binding term sheet with Sigma Lithium for battery-grade lithium concentrate
LG Energy Solution (LGES) has signed a six-year binding term sheet with Canada-based Sigma Lithium Corporation for an offtake agreement on a “take or pay” basis for the sale of 6% battery-grade high purity and environmentally sustainable lithium concentrate.
The six-year agreement scales from 60,000 tons per year in 2023 to 100,000 tons per year from 2024 to 2027 (Guaranteed Take-or-Pay Quantity) subject to Sigma Lithium and LGES executing a mutually acceptable definitive agreement to implement the offtake. Sigma Lithium and LGES also agreed to negotiate each year, starting in 2022, an additional optional supply of battery grade sustainable lithium, not otherwise committed in other Sigma Lithium offtake arrangements, as per the table below.
The purchase price will be linked to market prices for the high purity lithium hydroxide during the term of the offtake.
The offtake is intended to be legally binding on both Sigma Lithium and LGES, and is subject to, among other things, completion of the negotiation of definitive written agreement(s), which are to be consistent with the agreed terms contained in the binding term sheet.
With the rapid growth of the EV battery market, securing large volumes of environmentally sustainable and high-quality lithium materials is becoming one of the important sources of competitiveness in our industry. We are delighted to sign this landmark offtake with Sigma Lithium, sourcing environmentally-friendly battery-grade sustainable lithium concentrate directly from the upstream producer and collaborating with Sigma Lithium to make our battery supply chain increasingly more sustainable through our shared focus on innovation and ESG.—Dong Soo Kim, Senior Vice President of Procurement Center at LG Energy Solution
Sigma’s properties are located in Brazil’s Minas Gerais State, a mining-friendly state, in the municipalities of Araçuaí and Itinga. The company holds 27 mineral rights in four properties spread over 191 km2, or over 19,000 hectares, which include nine past-producing lithium mines.
Sigma’s focus is on the 100%-owned Grota do Cirilo property, the largest lithium hardrock deposit in the Americas, where the company has been producing environmentally sustainable battery-grade lithium concentrate on a pilot scale since 2018. A larger-scale commercial operation is planned with capacity for 220,000 tonnes (33,000 tonnes of LCE) annually in Phase I, rising to 440,000 tonnes (65,000 tonnes of LCE) in Phase II.
The company is in pre-construction and detailed engineering of a fully automated, dense media separator (DMS) production plant that will apply proprietary algorithms to digitally control the dense media. The production plant will be vertically integrated into the company’s mining operations, exclusively utilizing as feedstock the high purity spodumene ore from the project. The production plant will process the spodumene ore into a high purity 6% battery-grade lithium concentrate engineered to the specifications of its customers in the lithium-ion battery supply chain for EVs.
Sigma says that it has adhered consistently to the highest standards of ESG practices, which were established as part of its core purpose at inception in 2012. The production process will be powered by clean energy and the company will use state-of-the art water recirculation circuits in its processing combined with dry stacking tailings management. The DMS process of the production plant does not utilize hazardous chemicals, as a result its tailings are 100% recyclable into ancillary industries, such as ceramics.