After Tesla, it’s a Korean multinational’s turn to take a stake in Quebec’s lithium. LG Chem has just invested US$75 million (about CA$100 million) in Piedmont Lithium, the American company that owns 25% of Sayona Quebec, owns a large lithium mine in Abitibi and five sites in Quebec.
• Also read: Will Quebec soon join the world’s lithium giants?
• Also read: La Corne Mine: Tesla cars run on Quebec lithium
South Korea-based LG Chem will acquire 1,096,535 newly issued common shares of Piedmont at an approximate price of $68.40 per share.
This transaction will increase LG Chem’s ownership of Piedmont shares to approximately 5.7%.
battery sector
Under the terms of the agreement, Piedmont will supply LG Chem with 200,000 tonnes of spodumene concentrate for four years. The material, a key lithium ore, will come from Sayona Québec’s La Corne open pit mine in Abitibi.
LG Chem will use the raw material to manufacture cathode materials for its major customers in America. The South Korean giant currently supplies batteries to automakers including General Motors, Volvo, Daimler, Renault, Audi and Koreans Hyundai and Kia.
Unique business model
Valérie Fillion, Director General of AEMQ
In the critical minerals sector, it is normal for foreign companies to be present and finance local companies, explains Valérie Fillion, executive director of the Association de l’Exploration Minière du Québec (AEMQ).
“Processing fabrics for these minerals requires a different process, and we’re not specialized in that yet. The development of a competence chain can take between 15 and 20 years. We’re getting better every year, but right now there aren’t many companies here that can process and process the product,” she says.
Financial arrangements in this sector are often complex.
“You need to have an investor very early on in your project. And your investor is often the buyer of your product. He commits to buying the production, like a promise to buy. It’s very different from gold or other metals that we typically produce in Quebec and that are fairly easily traded in the markets,” adds Valérie Fillion.
Tesla also in decor
Recently, The Journal reported that electric car maker Tesla, owned by Elon Musk, will also come from the La Corne mine for its lithium needs.
In addition, Ottawa reiterated last November that foreign investments would be subject to national security scrutiny and that certain types of investments – such as those in critical mineral sectors – would now be subject to further scrutiny.
In the same breath, the government had ordered three Chinese companies to divest their stakes in Canadian companies in the lithium sector.
A three player transaction
LG CHEM
- Based in Seoul, South Korea.
- $42.1 billion in revenue in 2022.
- Holds 5.7% of Piedmont Lithium.
PIEDMONT LITHIUM
- Based in Belmont, NC.
- Owns 25% of Sayona Quebec (the other 75% is held by Australia’s Sayona Mining).
SAYONA MINING
- Based in Australia.
- Explores and develops lithium projects in Quebec (with Sayona Quebec) and Australia
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