LG Energy Solution has secured a supply chain of critical material for making electric vehicle batteries in Morocco in its efforts to bolster its readiness for toughened regulations in its key markets -- the US and Europe.

According to the South Korean battery maker on Wednesday, the company signed a memorandum of understanding with Chinese lithium compounds producer Yahua to produce lithium hydroxide in the North African country.

The US’ Inflation Reduction Act and EU’s Critical Raw Materials Act, both aiming to boost their local industries, require a certain proportion of battery parts and materials to be supplied from their homelands or countries that have inked free trade agreements with them. The acts intend to restrict the inflow of raw materials from China. As Morocco has FTAs with both the US and EU, the Korean company explained that the new footing in the African country will help strengthen the overall supply chain of lithium hydroxide and allow more flexible countermeasures to external management factors.

Lithium hydroxide is used in the production of high-powered EV batteries with a high proportion of nickel, as it is easy to combine with nickel, which is a critical material for cathode materials. According to LG Energy Solution, establishing a stable supply chain of lithium hydroxide is important for the battery industry because batteries containing more nickel have a higher density of energy and longer travel distance on a single charge.

LG Energy Solution has also signed contracts with critical material producers in Australia, Chile and Germany to set up a global supply chain of lithium.