The companies did not disclose any pricing details, but analysts said the amount is enough to power more than one million electric vehicles.
The deal, which is set to start in 2020, will see the Belgian battery materials producer provide LG Chem’s facilities with a total volume of 125,000 metric tonnes of material out of Umicore’s plants in Poland, Korea and China.
“This supply agreement will support LG Chem in meeting the growing demand for rechargeable lithium-ion batteries as car manufacturers are expanding their offering of longer-range electric vehicle models in several regions,” Umicore said in a press release.
The companies did not disclose any pricing details, but analysts said the amount was enough to power more than one million electric vehicles. LG Chem, which has supply deals in place with German automakers Volkswagen (OTC Pink:VLKAF,FWB:VOW), Daimler (OTC Pink:DDAIF,ETR:DAI) and Porsche (OTC Pink:POAHF,ETR:PAH3), has plans to expand its production capacity in Poland from 100,000 battery cells to 300,000.
Umicore and LG Chem will also team up for a technology licensing arrangement covering fundamental intellectual property rights.
“As a result of this agreement, both companies will share user rights on a selection of fundamental global patents for different high-end NMC cathode materials used in automotive and energy storage applications,” Umicore said in a statement.
Looking ahead, the companies are also in talks for a long term cooperation in battery recycling.
Most of the cathode material for LG Chem’s batteries will come from Umicore’s new cathode plant in Poland, which is due to start production in late 2020. The company is set to invest US$370 million in the cathode manufacturing facility as the European Union continues to push for the development of batteries in the region.
Earlier this year, Umicore signed a long-term deal with Glencore (LSE:GLEN,OTC Pink:GLCNF) for cobalt supply from the mining giant’s operations in the Democratic Republic of Congo — the world’s largest producer of cobalt.
In May, Umicore, which is Europe’s largest producer of battery materials for the electric vehicle industry, also acquired the Finland-based Kokkola cobalt refining and cathode precursor operations from a subsidiary of Freeport-McMoRan (NYSE:FCX) for US$150 million.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.