LG Chem, South Korea's leading chemical firm, announced Friday that the company has signed a deal to receive 200,000 metric tons of spodumene concentrate from Piedmont Lithium, which will ensure a stable supply of the key material for the company's electric vehicle battery production.

Under the deal, LG Chem will receive 50,000 tons of spodumene concentrate every year, starting in the third quarter of this year, from North American Lithium, a lithium mine in Quebec, Canada, in which Piedmont Lithium has a 25 percent stake. The contract will expire in the third quarter of 2026.

LG Chem will be able to extract 30,000 tons of lithium from the 200,000 tons of spodumene concentrate, which can be used in the production of batteries for around 500,000 EV units, the company said.

With the latest supply contract, LG Chem were able to satisfy the requirements of the US Inflation Reduction Act to receive tax credits and incentives.

To satisfy the IRA's critical minerals requirement, at least 40 percent of the value of the critical minerals contained in the vehicle's battery must be extracted or processed in any country with which the United States has a free trade agreement in effect. The required percentage would increase gradually to 80 percent by 2027.

LG Chem is currently the only South Korean company to import lithium from North America.

Meanwhile, LG Chem also made a $75 million investment to acquire a 6 percent stake in Piedmont Lithium. Through the equity investment, LG Chem will be able to become a preferred bidder for 10,000 tons of lithium hydroxide that Piedmont Lithium produces in the US.