Sichuan Zhiyuan Lithium, a wholly-owned subsidiary of Guangdong Weihua Corp, has signed a supply agreement for micro-grade lithium hydroxide with LG international Corp, an investment and trading company owned by LG Group.

Zhiyuan Lithium will sell 1,500 tonnes of micro-grade lithium hydroxide to LG International to be delivered between July and December 2020, while the purchasing volume for 2021 will be settled by both companies before the end of this year.

LG International will issue purchase orders to Zhiyuan Lithium on a monthly basis. The supply agreement has not locked in prices, which will be negotiated by both parties.

Zhiyuan Lithium has a total lithium production capacity of 23,000 tonnes per year, while it is expected to reach 43,000 tpy by the end of 2020, according to Guangdong Weihua Corp.

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. Usually, micro-grade hydroxide trades at a 5,000-10,000 yuan ($716-1,433) premium over the Fastmarkets' battery-grade lithium hyrdroxide price range.

Fastmarkets’ lithium hydroxide monohydrate, 56.5% LiOH.H2O min, battery grade, spot price range exw domestic China was at 45,000-51,000 yuan per tonne on Thursday July 30, steady since July 9.