Sigma Lithium Corporation has struck an offtake agreement with LG Energy Solution Ltd for its battery grade sustainable lithium concentrate.
The agreement with LG – one of the world’s largest manufacturers of lithium-ion batteries for electric vehicles – will run through 2027.
Commercial delivery is expected to start in 2022, according to a statement from Sigma.
READ: SIGMA Lithium shares begin trading on the NASDAQ
The Vancouver-based lithium firm will supply its 6% battery-grade high purity and sustainable lithium concentrate to LG, with guaranteed take-or-pay quantities scaling from 60,000 tons per year in 2023 to 100,000 tons per year between 2024 and 2027.
Sigma may also supply LG with more lithium over the agreement’s six-year term in amounts ranging from 15,000 to 50,000 per year.
The purchase price is linked to market prices for high-purity lithium hydroxide during the offtake agreement term.
LG Energy Solution senior vice president of procurement center Dong Soo Kim said in a statement that securing large volumes of environmentally sustainable and high quality lithium materials is “becoming one of the important sources of competitiveness in our industry” with the rapid growth of the electric vehicle battery market.
“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.”
Sigma co-CEO Ana Cabral-Gardner noted that the company has been producing battery-grade lithium concentrate at its onsite demonstration pilot plant, with the goal to reach net zero emissions by 2024.
“We believe this offtake will create long-term value for all of our stakeholders,” Cabral-Gardner told shareholders.
“Sigma Lithium has been able to deliver large samples of one of the purest, most environmentally and socially sustainable lithium concentrates in the marketplace to potential customers. Thus, our focus on sustainability and the investments we made in our assets to develop an environmentally friendly process to produce battery grade sustainable lithium concentrate, enables Sigma Lithium to attain a leading industry position, supplying LG Energy Solution, the largest global producer of advanced batteries for electric vehicles and green energy storage.”
Sigma is hoping to forge direct commercial relationships with the largest Tier 1 battery producers in order to gain a stable source of future cash flows for the company.
The firm’s production process is powered by 100% clean energy, eliminates the use of hazardous chemicals, recirculates 100% of the water and dry stacks all of its tailings.
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