Samsung SDI announced on Tuesday that it has signed a cathode material supply agreement worth 1.6 trillion won (about $1.1 billion) with L & F. The move aims to further strengthen its position in the North American energy storage system (ESS) market by building a battery material supply chain outside of China.

According to the agreement, Samsung SDI will purchase cathode materials from L & F, a battery material manufacturer headquartered in Daegu, for the production of cost-effective lithium iron phosphate (LFP) batteries for energy storage systems. The agreement is effective from 2027 for a period of three years, with an option to renew for three years. The raw materials will be supplied to StarPlus Energy, a joint venture between Samsung SDI and Stellantis in Indiana, for the production of energy storage batteries.

it is reported that since the second half of last year, the factory has shifted some of its production lines from electric vehicles to energy storage system applications, and plans to realize simultaneous mass production of LFP batteries and high-end high-nickel batteries in the fourth quarter of this year. Industry analysts believe that the agreement will help ensure a stable supply of key materials while enhancing Samsung SDI's competitiveness in the North American energy storage market.

Given the high concentration of global LFP cathode material supply in China, the United States is tightening policy to promote supply chain diversification. L & F became the first non-Chinese company to invest in the production of LFP cathode materials last year and is currently building an annual production capacity of 60000 tons in Daegu.

Industry sources said that with Samsung SDI accelerating its entry into the North American energy storage market and signing a number of supply contracts, including a total of 3.5 trillion won with two U.S. energy companies, the cooperation is significant. In addition, relying on fire safety technologies such as no heat spread and enhanced direct injection, Samsung SDI recently updated its energy storage battery brand to "PrismStack", highlighting the advantages of its square cell design in improving energy density and safety.

A person in charge of Samsung SDI said: "This agreement reflects the company's active efforts to meet the growing demand for non-Chinese supply chains. He said he expects this to strengthen the company's competitiveness in North America and create new business opportunities.