LG Energy Solution has signed a massive lithium supply deal with a Chilean company, the battery maker said Friday.

With the signing of the agreement, Santiago-based SQM will supply 100,000 tons of lithium to LG Energy Solution for the next seven years, which can produce batteries for over 2 million fully electric vehicles (EVs).

It is the biggest-ever lithium supply deal globally, according to LG Energy Solution.

The latest deal overrides the preexisting 10-year supply contract that LG Energy Solution signed with SQM in 2020.

The 36,000 tons of lithium that were to be supplied by SQM to LG Energy Solution for the remaining 7 years under the previous contract will be expanded three times over to 100,000 tons.

SQM will supply lithium hydroxide for high-nickel batteries as well as lithium carbonate for lower-cost LFP, or lithium iron phosphate, batteries for energy storage systems.

As SQM operates lithium mines in United States free trade agreement (FTA) partner countries, such as Chile and Australia, the company’s lithium qualifies for the U.S. Inflation Reduction Act (IRA) incentive program.

The two companies plan to cooperate further for LG Energy Solution’s production facilities in Asia and North America.

“The latest deal not only further ensures the stable supply of lithium, one of the core minerals for battery production, but also helps us better respond to the U.S. IRA through supply chain diversification,” according to Kim Myung-hwan, LG Energy Solution’s chief procurement officer.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]