Nemaska Signs Lithium Offtake Deal with LG Chem

Canadian miner Nemaska Lithium (TSX:NMX) has signed an offtake agreement with Korean company LG Chem (KRX:003550) to supply battery-grade lithium hydroxide, the company announced on Tuesday (July 3).

Under the agreement, the company will supply LG with 7,000 tonnes per year of lithium hydroxide produced at its commercial plant in Shawinigan.

The deal is for an initial five-year period on a take-or-pay basis starting in October 2020. Nemaska can reschedule depending on the plant’s anticipated commissioning, ramp up and production start dates.

“We are pleased with this first step towards establishing a long-term commercial relationship between LG and Nemaska Lithium. The signing of this agreement is a clear vote of confidence by LG in our business plan and our capacity to be a long-term supplier of lithium hydroxide,” said Guy Bourassa, president and CEO of Nemaska Lithium.

Nemaska will be operating the Whabouchi mine in Quebec, Canada, which the company says is one of the richest lithium spodumene deposits in the world, both in volume and grade.

The plan is for spodumene concentrate mined at Whabouchi to be transformed into high-purity lithium hydroxide and lithium carbonate using the company’s proprietary methods.

In April, Nemaska received a strategic investment from SoftBank, which agreed to invest up to C$99,075,000 in the company via a private placement of common share subscription receipts. In return, the global technology player will hold up to a 9.9-percent stake in Nemaska with an option to purchase up to 20 percent of the company’s lithium hydroxide and lithium carbonate production.

A few days after, the company entered into a US$150-million streaming deal with Orion Mine Finance. Under the deal, the private equity firm will receive 14.5 percent of all lithium hydroxide and lithium carbonate produced at Shawinigan for up to 5,000 tonnes of refined lithium products.

During the same month, the company signed an agreement in principle to supply up to 5,000 metric tonnes per year of lithium hydroxide to Swedish battery maker Northvolt, which is building the largest lithium-ion battery factory in Europe.

After signing the deal with LG, Nemaska said it has now committed over 90 percent of its anticipated 33,000 tonnes per year of lithium carbonate equivalent capacity.

“Very soon Nemaska won’t have any future lithium production left and will have to expand before starting. Battery and automakers [are] desperate for long-term supply security, but money men [are] still hesitant,” Simon Moores, managing director at Benchmark Mineral Intelligence, said after the news.

Shares of Nemaska jumped more than 8 percent after the announcement and on Wednesday (July 4) morning were trading up 4 percent in Toronto at C$0.88.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Nemaska Lithium is a client of the Investing News Network. This article is not paid-for content.