Samsung SDI Signs L&F Deal to Supply LFP Cathode Materials for US ESS... "Secures Non-China Supply Chain" (Comprehensive)

Samsung SDI and LNf have signed a mid-to-long-term supply contract for LFP battery cathode materials. Samsung SDI

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Samsung SDI announced on March 24 that it has signed a mid-to-long-term supply contract with L&F for cathode materials for lithium iron phosphate (LFP) batteries.

Under this contract, Samsung SDI will procure approximately KRW 1.6 trillion worth of cathode materials from L&F for the production of LFP batteries for energy storage systems (ESS) over a three-year period starting in 2027. In addition, Samsung SDI has secured an option to receive additional supplies for another three years thereafter.

Samsung SDI plans to use the LFP cathode materials secured from L&F to manufacture batteries for ESS at StarPlus Energy (SPE), its joint venture with Stellantis located in Indiana, USA.

Since the fourth quarter of last year, SPE has been gradually converting some of its production lines from electric vehicle batteries to ESS batteries. Starting in the fourth quarter of this year, SPE plans to mass-produce not only its existing high-nickel nickel cobalt aluminum (NCA) batteries but also LFP batteries.

Samsung SDI expects that this contract with L&F will help establish a stable domestic supply chain and reinforce its competitive edge in the North American ESS market. Samsung SDI is the only company in Korea that manufactures prismatic batteries, and prismatic LFP batteries are highly preferred in the global ESS market.

In August of last year, L&F became the first non-Chinese company to make a new investment in LFP cathode materials, and is currently building production facilities with an annual capacity of 60,000 tons. The first phase, a 30,000-ton production facility, is scheduled for completion next month. After pilot operation and customer testing, L&F plans to begin full-scale mass production in the third quarter of this year. Starting with this contract, L&F aims to actively support Korean battery makers' entry into the North American LFP ESS market.

Globally, most of the LFP cathode material supply comes from Chinese companies. However, the U.S. government has recently tightened origin regulations through measures such as the "Prohibited Foreign Entity (PFE) regulation," making supply chain diversification away from China a key issue. In this context, Samsung SDI has gained an advantageous position by securing a supply chain for domestically produced core materials.

A Samsung SDI official said, "We proactively signed a supply contract with a domestic company to meet the growing demand for de-China policy in the materials market," and added, "Through this contract, we will further strengthen our competitiveness in the North American market and create more business opportunities."

Ryu Seungheon, Chief Financial Officer (CFO) of L&F, said, "We are actively exploring supply opportunities not only with Korean battery companies but also with overseas automakers and global ESS firms, so continued growth is expected." He added, "We are planning strategic growth measures such as allocating volumes to each customer and expanding additional production lines."

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