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Korean battery giant takes a big punt on $1.5b Qld nickel, cobalt project

Business

A $1.5 billion nickel and cobalt project in north Queensland has received a major boost with the signing of an offtake agreement for all of its production.

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Korea’s LG Energy Solution – the world’s largest producer of batteries for electric vehicles – has secured 100 per cent of the battery-grade nickel and cobalt amid “growing concerns about future supplies of raw materials’’.

Under the initial six-year term, LGES will buy 71,000 dry metric tonnes of nickel and 7000 tonnes of cobalt in the form of mixed hydroxide precipitate, which is a raw material used in lithium-ion batteries.

It follows a deal earlier this year when LG Energy Solution invested in the Queensland Pacific Metals for 7000 tonnes of nickel and 700 tonnes of cobalt a year for a decade starting late 2023. LG now holds a 7.39 per cent stake in QPM.

The only condition to the latest deal is that Australian Mines secures financing before June 30, 2022.

“Australian Mines will now swiftly to finalise agreements with a range of non-financing partners,’’ the company said.

A financial investment decision has previously been scheduled later this year with a potential start of operations in 2023. It has also previously received an offer of financial support from the Queensland Government.

The $1.5 billion project would support an estimated 500 jobs over a two-year construction period and create 289 long-term positions once fully operational.

The Queensland Government earlier this year granted the Sconi project with prescribed project status, which will help Australian Mines smoothly transition the site into a tier one project.

LG said the supply deal would translate to producing batteries that could power 1.3 million high-performance electric vehicles, with driving range surpassing 500 kilometers on a single charge.

LG Energy Solution president Jong-hyun Kim said securing key raw materials and a responsible battery supply chain had become a critical element in gaining a greater control within the industry, as the demand for electric vehicles worldwide heightened in recent years.

 “LGES will solidify its position as the world’s leading battery manufacturer through a steady supply of raw materials for EV batteries,’’ he said.

 

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