Avalon Advanced Materials have signed a non-binding memorandum of understanding (MOU) with LG Energy Solution (LGES). Starting in 2025, Avalon will supply LGES with battery-grade lithium hydroxide.
The collaboration is part of Avalon’s plans to establish a lithium battery materials supply chain in Ontario, which will serve the needs of future electric vehicle and lithium-ion battery manufacturers across Southern Ontario. Entering into a commercial relationship with a leading lithium-ion manufacturer such as LGES will help to enable Avalon’s vision to develop a sustainable and secure domestic lithium hydroxide supply chain.
The MOU was signed in Canada at a ceremony supported by the Korea Mine Rehabilitation, Mineral Resources Corporation, Natural Resources Canada and other partners.
Avalon, LGES and partners will continue discussions to enter into a definitive supply agreement, with the intention to finalise in around six weeks.
Ontario’s growing demands for lithium hydroxide and carbonate
As new electric vehicle and battery manufacturing capacity grows across North America and Canada, the demand for lithium hydroxide and carbonate has increased rapidly.
In March 2022, the state of Ontario announced its first ‘Critical Minerals Strategy’, which Premier Doug Ford described as “the government’s blueprint to connect industries, resources and workers in our province’s north to the future of manufacturing in the south as we build up home-grown supply chains.”
Ontario’s rich supply of critical minerals in the North of the region allows the state to take full advantage of the demand for critical minerals in this new advanced technology sector of the economy. The supply chain will create new economic developments by expanding the economy in the North.
Terms of the MOU
Under the terms of the MOU, Avalon will commit, for an initial five years, to provide LGES with at least 50% of its planned lithium hydroxide production from its Ontario facility. There is potential to increase this as demand grows.
LGES has recognised the strategic value of Avalon’s planned lithium processing facility. Through working with Avalon, they will be able to connect downstream users with the battery-grade lithium hydroxide required to meet production targets.
Youngsoo Kwon, CEO of LG Energy Solution, said: “As we have recently announced our mid-to-long-term strategy to focus on North America, the fastest growing EV market, this partnership serves as a crucial step towards securing a stable key raw material supply chain in the region.
The agreement builds on growing Canadian-South Korean economic ties and will support clean energy, along with foreign direct investment objectives.
“By constantly investing in upstream suppliers and establishing strategic partnerships with major suppliers of critical minerals, LGES will continue to ensure the steady delivery of our top-quality products, thereby further advancing the global transition to EV’s and ultimately to a sustainable future.”
Don Bubar, President of Avalon, added: “We are delighted to enter into this agreement with LGES to support our aspirations of establishing the mid-stream processing capacity in Thunder Bay to take advantage of the many lithium resources that occur in North-Western Ontario to create the supply chain for the emerging lithium-ion battery manufacturing capacity in southern Ontario.
“As was noted by Premier Ford, this creates a win-win for Ontario’s economy in both the south and the north and will also create many new economic development opportunities for remote Indigenous communities.”
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