South Korean lithium-ion battery maker LG Energy Solution announced Thursday it has signed a provisional deal with Australian graphite supplier Syrah Resources to diversify its supply sources for making graphite anodes typically used in electric car batteries.

Under a memorandum of understanding, LG and Syrah on Wednesday tentatively agreed on a 2,000 metric ton graphite supply deal in 2025 as Syrah's graphite mines become operational. The two companies will ink the final supply contract by the end of 2022.

The supply deal of the critical material is designed to reduce LG's reliance on graphite imports from China in the wake of the August signing of the Inflation Reduction Act by the Joe Biden administration.

Some 70 percent of graphite in the world have originated from China in 2021, according to an estimate by the International Energy Agency. About 66 kilograms of graphite is required for an electric vehicle.

Syrah operates a mine for active anode material in Mozambique and is set to begin operation of a graphite processing facility in Louisiana, the United States, partly backed by the US Department of Energy's $220 million grant. Syrah's graphite will allow LG Energy Solution to supply batteries to electric vehicles that meet requirements for car buyers' tax credit under the IRA, according to LG.

LG will also be able to reduce the cost of graphite imports and maintain cost competitiveness of its battery products, LG said in a statement.

LG is going to greater lengths to restructure its critical material supply chain outside China for its lithium-ion batteries.

Most recently in September, LG signed a deal with Canadian firm Electra Battery Material over the supply of 7,000 tons of cobalt sulfate for three years; Avalon Advanced Materials for 55,000 tons of lithium hydroxide for five years; and Snow Lake Lithium for a 10-year supply of 200,000 tons of lithium hydroxide.

LG Energy Solution has also secured the supply of lithium ore, lithium hydroxide and lithium carbonate with partners such as Canada-based Sigma Lithium Resources, US-based Compass Minerals, Australia-based Vulcan Energy Resources and Liontown Resources.