South Korean battery maker SKI and cathode maker Ecopro have signed strategic supply agreements for lithium hydroxide with a major Chinese lithium producer.

Tianqi Lithium Kwinana Pty Ltd (TLK), the wholly owned subsidiary of Chinese lithium producer Tianqi Lithium, has signed two strategic supply agreements for battery-grade lithium hydroxide separately with SK Innovation Co Ltd (SKI) and EcoPro BM Co Ltd (Ecopro), the producer said.

TLK will provide battery-grade lithium hydroxide to SKI from July 1, 2019, to December 31, 2024, and to Ecopro between July 1, 2019, and December 31, 2023. The two contracts have not locked in purchase volume and prices, which will be negotiated later, according to the two buyer requirements.

The annual sales volume of the two contracts will cover 20-25% of capacity at TLK’s lithium hydroxide project in Kwinana, Western Australia, the company said.

Kwinana will have total output of 48,000 tonnes per year of battery grade lithium hydroxide upon completion, with each stage comprising 24,000 tpy.

The company is carrying out the commissioning of the first phase of the project - it expects to commence production in the second half of this year. Construction of the second phase should be completed by the second half of 2019, with production starting in the second half of 2020 after a phased commissioning process.

Tianqi produced close to 50,000 tonnes of lithium carbonate equivalent (LCE) in 2018 and expects to increase production this year based on the contribution from Kwinana, the company said. Tianqi's LCE capacity could be as high as 58,800 tpy by the end of 2019.

Separately, TLK also signed a memorandum of understanding (MoU) with SKI to discuss the opportunity of developing a global electric vehicle and battery supply chain together. The MoU has a validity term of two years.

SKI, an energy and chemical company in South Korea, owns several battery companies in China, Europe and the United States. Ecopro is a major cathode maker in South Korea.

Demand for lithium hydroxide is expected to increase in the coming years, coinciding with the trend for the development of high performance batteries and vehicles with longer driving range. Battery-grade hydroxide prices held firm in 2018 but started a downward trend in late 2018. So far in 2019, prices have held at low levels because of slow downstream demand and increasing supply.

Fastmarkets' battery-grade lithium hydroxide monohydrate (min 56.5% LiOH.H2O) price was 93,000-98,000 yuan ($13,861-14,606) per tonne as of Thursday March 28, stable since March 14. The price had been as high as 148,000-153,000 yuan per tonne in the first half of last year.

(This article was updated on April 3 with details of the commissioning and production timetable at Kwinana as well as background detail)