Seoul: Samsung SDI Co. announced on Tuesday that it has entered into a significant purchase agreement with L and F Co., a South Korean battery material supplier. This move is aimed at expanding Samsung SDI's energy storage system (ESS) business in North America, particularly in light of increasing restrictions by the U.S. on China-related supply chains.

According to Yonhap News Agency, the agreement, which was signed on Monday, stipulates that Samsung SDI will procure 1.6 trillion won (approximately US$1.06 billion) worth of cathode materials from L and F over a three-year period starting in 2027. The materials are intended for use in lithium iron phosphate (LFP) batteries, with an option to extend the agreement for an additional three years. These materials will be essential for the production of ESS batteries at a facility in Indiana, operated by StarPlus Energy, a joint venture between Samsung SDI and Stellantis.

Samsung SDI indicated that this strategic move is part of its broader efforts to comply with tighter U.S. regulations on Chinese-manufactured products, which have underscored the necessity for supply chain diversification. The company highlighted the importance of reducing dependency on China by securing agreements with domestic partners.

Samsung SDI expressed optimism about the partnership, stating that it anticipates the deal will bolster its competitiveness in the North American market and pave the way for new business opportunities.