LG Energy Solution is seeking to secure key battery parts in Morocco as part of efforts to strengthen its supply chain for EV batteries.

The top battery maker said on Wednesday that it signed a memorandum of understanding(MOU) with China’s Sichuan Yahua Industrial Group to produce lithium hydroxide in Morocco, which has a free trade agreement(FTA) with the U.S. and the European Union.

South Korea would not be violating the U.S. Inflation Reduction Act(IRA) by producing lithium hydroxide in Morocco given that the IRA requires that a certain percentage of minerals used in batteries be mined or processed in countries with an FTA with the U.S.

Lithium hydroxide is used as a main substance in making batteries for high-capacity EVs as it combines easily with nickel, which is a key cathode material.

An official of LG Energy Solution said the company hopes to secure high-quality lithium hydroxide through a stable supply chain for raw materials and the synergy from Yahua’s knowhow in production and quality.