LG Energy Solution has signed a 10-year lithium supply agreement with Smackover Lithium as the battery maker moves to strengthen its U.S.-based supply chain for electric vehicles and energy storage systems.
Under the binding offtake agreement, Smackover Lithium will supply LG Energy Solution with 8,000 metric tonnes of battery-grade lithium carbonate annually for 10 years. Deliveries are scheduled to begin in 2029, when commercial production is expected to start at the South West Arkansas (SWA) Project.
The agreement covers 80,000 tonnes of lithium carbonate over the full contract period. Financial terms, including the agreed pricing structure, were not disclosed.
Smackover Lithium is a joint venture between Standard Lithium and Equinor. Standard Lithium owns a 55% stake and operates the project, while Equinor holds the remaining 45%.
The partnership is developing lithium projects across Arkansas and Texas that use Direct Lithium Extraction (DLE) technology to recover lithium from underground brine.
The first phase of the South West Arkansas Project is expected to produce up to 22,500 tonnes of lithium carbonate per year. LG Energy Solution’s 8,000-tonne annual commitment would therefore account for more than one-third of the project’s planned initial output.
The company is not the project’s only major customer. Smackover Lithium previously signed a separate 10-year agreement with commodity trader Trafigura for another 8,000 tonnes of lithium carbonate per year.
Together, the two agreements account for approximately 16,000 tonnes of annual production. Smackover Lithium has said it is targeting long-term contracts covering roughly 80% of the project’s planned production, meaning the existing agreements represent around 90% of that targeted contracted volume.
The lithium carbonate supplied to LG Energy Solution will be produced using direct lithium extraction and purification technology.
Unlike conventional lithium production that can rely on large evaporation ponds, DLE separates lithium directly from brine before the material is processed into battery-grade lithium carbonate.
Smackover Lithium and LG Energy Solution describe the technology as a more sustainable approach to lithium production, although specific environmental comparisons with conventional extraction methods were not disclosed.
The technology is becoming increasingly important as battery manufacturers seek additional domestic sources of critical minerals while reducing dependence on overseas supply chains.
LG Energy Solution Expands Its U.S. Battery Footprint
The lithium agreement comes as LG Energy Solution continues to expand battery manufacturing in North America.
The company operates seven production facilities in the U.S., including standalone manufacturing sites and facilities operated with partners. Several of these facilities are being equipped to produce batteries using lithium iron phosphate (LFP) chemistry, which is increasingly popular for stationary energy storage because of its cost and durability advantages.
LG Energy Solution expects to have more than 50 GWh of LFP production capacity for stationary energy storage across North America by the end of 2026, spanning its own facilities and partner-operated locations.
The company’s new battery plant in Lansing, Michigan, has also begun production of LFP cells for energy storage applications. The facility supplies LFP batteries for customers including Tesla and is expected to eventually produce NMC batteries for Toyota’s electric vehicles.
Energy Storage Is Becoming a Major Battery Market
The deal with Smackover Lithium is aimed at more than just the growing EV market.
LG Energy Solution sees North America’s rapidly expanding energy storage system (ESS) market as an increasingly important source of demand for batteries. Rising electricity consumption, renewable energy deployment and the need for grid-scale storage are driving investment in stationary battery systems.
Securing a local supply of lithium carbonate gives LG Energy Solution greater control over the raw materials needed for these batteries while supporting its strategy of manufacturing closer to its customers.
The Arkansas lithium is also expected to satisfy requirements concerning materials sourced from entities that are not classified as prohibited foreign entities (PFEs), helping LG Energy Solution navigate increasingly complex U.S. rules governing battery supply chains and critical minerals.
