Australia-based lithium miner Vulcan Energy Resources is signing a binding long-term supply agreement to sell lithium hydroxide to LG Chem Ltd’s battery unit, the No. 1 producer of lithium-ion batteries for electric vehicles in the world, Kallanish reports.

Under the deal, the Australian company will sell lithium hydroxide from its planned Black Forest project in Germany to subsidiary LG Energy Solutions, starting in 2025. It will buy 5,000 tonnes of battery-grade lithium hydroxide in the first year and that will increase to 10,000 t/y in the second year and for the rest of the five-year agreement. The deal can also be extended for another five years. The pricing will be based on market prices for lithium hydroxide.

LGES, a unit of South Korea’s LG Chem, will use the chemicals to produce battery cathodes to be provided to original equipment manufacturers.

“LGES’s operations are of course global, but it is already producing batteries in Europe,” says Vulcan Energy managing director Francis Wedin in a statement. “The agreement is in line with our strategy to work with Tier One battery and automotive companies in the European market. We look forward to a long and productive relationship with LGES.”

The offtake agreement is a first for Vulcan’s German project and will account for 25% of total output once that project is fully ramped up in 2026.

Vulcan intends to invest €1.7 billion ($2.01 billion) at its German zero-carbon lithium project that relies on hot springs and geothermal brine in the Upper Rhine River Valley.