Wed. 29 Jun 2022, 8:18am ET Benzinga News, Contracts

Compass Minerals (NYSE:CMP), a leading global provider of essential minerals, today announced the signing of a non-binding Memorandum of Understanding (MOU) to supply LG Energy Solution (LGES; 373220:KS), a leading global manufacturer of lithium-ion batteries for electric vehicles and energy storage systems, with a battery-grade lithium product from its lithium brine development project at its Ogden, Utah, solar evaporation facility.

Per the terms of the MOU, Compass Minerals would commit, for up to seven years initially, at least 40% of its planned, annual phase-one production to LGES starting in 2025. The MOU also includes an option for Compass Minerals to supply up to an additional 40% annually of the company's phase-two production once the project is at full scale. The company has previously announced an expected annual commercial production capacity of 30 kMT to 40 kMT lithium carbonate equivalent (LCE) for the project, with an initial phase-one capacity of up to 10 kMT LCE coming online by 2025. As outlined in the MOU, purchase pricing would be based on market price and sales volume thresholds would be dependent upon product qualifications.

"Our lithium vision is to support the North American battery market by accelerating the development of a sustainable and secure domestic lithium supply chain," said Chris Yandell, head of lithium for Compass Minerals. "Entering into this commercial relationship with a proven manufacturing leader like LGES will help enable that vision, as well as assist LGES in solidifying its U.S. supply chain."

As previously announced, Compass Minerals is pursuing the sustainable development of an approximately 2.4 mMT LCE resource on the Great Salt Lake, readily available for extraction through existing permits, water rights and operational infrastructure at the company's Ogden facility, the largest of its kind in the Western Hemisphere.

"Securing key raw materials has become critically important, in order to maintain our lead position in the global battery market," said Dongsoo Kim, senior vice president of procurement center at LG Energy Solution. "We believe partnering up with Compass Minerals will aid in achieving that goal while solidifying supply chain in the U.S."

Compass Minerals will continue good-faith negotiations with LGES toward a binding supply agreement as part of the company's broader lithium project commercial offtake strategy.