Tianqi Lithium, a major lithium supplier based in China, announced on June 27 that it has signed a long-term supply agreement with South Korea’s LG Chem. Under this agreement, Chengdu Tianqi Lithium, which is a subsidiary of Tianqi Lithium, will supply LG Chem with lithium hydroxide monohydrate from January 2023 to December 2026. This deal came just after Tianqi Lithium had inked another contract of similar scale with Dynanonics on June 24.
LG Chem is a major chemical company with a diversified business portfolio that covers core sectors such as petrochemicals, advanced materials, and biotechnology. LG Chem’s subsidiary LG Energy Solution specializes in EV power batteries and is currently pursuing an aggressive vertical integration strategy. By positioning itself in the key fields and balancing its business interests, LG Chem is expected to gain competitiveness in the global market.
The price and quantity of the deal between Tianqi Lithium and LG Chem have yet to be disclosed. However, Chengdu Tianqi Lithium said both parties will jointly establish a suitable pricing mechanism through negotiations. Also, the agreement may be extended by an additional three years upon the approval of both parties six months prior to its originally set termination date.
Tianqi said the deal with LG Chem ensures that there will be a significant consumption channel for its lithium hydroxide monohydrate over the long run. This, in turn, will contribute to the stability and sustainability of its business operations in the future. All in all, the deal is beneficial to the interests of the company and its shareholders.
This latest deal is not the first between the two parties. In August 2019, TLK, another subsidiary of Tianqi Lithium, secured a contract from LG Chem for the provisioning of lithium hydroxide over a three-year period from 2020 to 2022. Furthermore, the contract requires TLK to meet LG Chem’s demand with at least 15% of the annual production capacity of its lithium hydroxide plant in the Australian city of Kwinana.
Turning to the partnership between Tianqi Lithium and Dynanonics, a long-term supply agreement was inked between Chengdu Tianqi Lithium and Dynanonics on June 24. Fast-forward to June 27, the day when the long-term supply agreement with LG Chem was revealed, Dynanonics also announced that it will participate in Tianqi Lithium’s upcoming IPO as a cornerstone investor. Tianqi Lithium will launch its IPO at HKEX in July, and Dynanonics will spend no more than USD 160 million to purchase shares in the company. According to the latest reporting from other news outlets, Tianqi Lithium has updated its IPO filing to include Dynanonics as a cornerstone investor. Dynanonics is a major Chinese supplier for LFP cathode materials.
Regarding financial performance, Tianqi Lithium’s earnings report for the first quarter of 2022 shows a net profit of CNY 3.328 billion and a revenue of CNY 5.257 billion. The year-on-year comparison reveals a growth rate of 1442.65% for net profit and a 481.41% for revenue. Furthermore, Tianqi Lithium notified on May 22 that the financial performance of Sociedad Química y Minera de Chile (SQM) for the first quarter had exceeded expectations. And since Tianqi Lithium is one of the major stakeholders in SQM, its projected net profit for the first half of 2022 has been further corrected up by around CNY 620 million.
This article is a translation of a Chinese article posted by TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain.