Sigma Lithium and LG Energy Solution sign milestone six-year binding term sheet for lithium offtake agreement.
Sigma Lithium Corporation (“Sigma Lithium”) (NASDAQ: SGML) (TSX-V: SGML), dedicated to powering the next generation of electric vehicle batteries with environmentally sustainable and high-purity lithium concentrate, announced the signing of a binding term sheet for an offtake agreement on a “take or pay” basis (the “Offtake”) for the sale of 6% battery-grade high purity and environmentally sustainable lithium concentrate (“Battery Grade Sustainable Lithium Concentrate”) to LG Energy Solution, Ltd (“LGES”), one of the world’s largest manufacturers of advanced lithium-ion batteries for electric vehicles.
The six-year LGES Offtake for Battery Grade Sustainable Lithium Concentrate scales from 60,000 tons per year in 2023 to 100,000 tons per year from 2024 to 2027 (“Guaranteed Take-or-Pay Quantity”) subject to Sigma Lithium and LGES executing a mutually acceptable definitive documentation to implement the Offtake.
Sigma Lithium and LGES also agreed to negotiate each year, starting in 2022, an additional optional supply of Battery Grade Sustainable Lithium (“Optional Offtake Quantity”), not otherwise committed in other Sigma Lithium offtake arrangements, as per the table below.
The purchase price for the Battery Grade Sustainable Lithium Concentrate under the Offtake will be linked to market prices for the high purity lithium hydroxide during the term of the Offtake.
The Offtake is intended to be legally binding on both Sigma Lithium and LGES, and is subject to, among other things, completion of the negotiation of definitive written agreement(s), which are to be consistent with the agreed terms contained in the binding term sheet.
Mr. Dong Soo Kim, Senior Vice President of Procurement Center at LG Energy Solution.
With the rapid growth of the EV battery market, securing large volumes of environmentally sustainable and high-quality lithium materials is becoming one of the important sources of competitiveness in our industry.
“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.”
Ana Cabral-Gardner, Co-CEO, Sigma Lithium.
Since 2018, Sigma Lithium has been producing battery-grade sustainable lithium concentrate at its on-site demonstration pilot plant while executing our sustainability roadmap to support decarbonization and reach net zero emissions by 2024.
“We believe this offtake will create long-term value for all of our stakeholders. 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.”
“We are truly delighted to have the ability to provide LG Energy Solution with significant quantities of battery grade sustainable lithium concentrate that will support the large-scale production of lithium-ion batteries required to power the future of electric mobility and clean energy,” added Cabral-Gardner.
“This offtake is perfectly aligned with our strategy of creating direct commercial relationships with the largest Tier 1 battery producers (who are the final end-users in the lithium supply chain), providing stability to our future cash flows.”
“Sigma Lithium’s production process is 100% powered by clean energy, does not utilize hazardous chemicals, recirculates 100% of the water and dry stacks 100% of its tailings. We believe that sustainable, scalable and reliable production of high-quality lithium will be essential to meeting demand from sustainable energy leaders like LGES.”
HIGHLIGHTS
- Binding offtake term sheet signed between Sigma Lithium and LG Energy Solution to supply Battery Grade Sustainable Lithium Concentrate through 2027, with start of commercial delivery set for 2022.
- LG Energy Solution to purchase on a “take-or-pay” basis 60,000 tons per year of Battery Grade Sustainable Lithium Concentrate for the first phase of Sigma Lithium’s production, increasing by 40,000 tons per year during the second phase of production, for a total purchase on a “take-or-pay” basis of 100,000 tons per year.
- Pricing will be floating and linked to market prices for high purity lithium hydroxide.
- LG Energy Solution and Sigma mutually have agreed to optional additional offtake volumes of up to 50,000 tons per year of Battery Grade Sustainable Lithium Concentrate.
Sigma Lithium and LG Energy Solution Sign Milestone Six-Year Binding Term Sheet for Lithium Offtake Agreement, VANCOUVER, BC, October 5, 2021
