Seoul, March 24 (Yonhap) Samsung SDI said on Tuesday that it has signed a purchase agreement with South Korean battery material supplier L & F, aiming to expand its energy storage system (ESS) business in North America in response to the United States' increasingly stringent regulatory rules for China-related supply chains.

According to the agreement signed on Monday, Samsung SDI will purchase 1.6 trillion won (approximately US $1.06 billion) worth of lithium iron phosphate (LFP) cathode materials from L & F within three years. The delivery period starts in 2027 and can be extended for an additional three years. The batch of materials will be used in the production of energy storage system batteries at StarPlus Energy, a joint venture between Samsung SDI and Stellantis, in Indiana.

Samsung SDI said the move was part of a response to stricter US regulation of Chinese-made products, which had made "supply chain diversification an increasingly important priority".

Samsung SDI said in a statement: "In response to supply chain demand to reduce dependence on China, we have taken the initiative to sign supply agreements with domestic materials partners. Through this cooperation, we expect to further enhance our competitiveness in the North American market and create more business opportunities."