LG Energy Solution and Yahua Resume Lithium Plant Project in Morocco
LG Energy Solution (LGES) has resumed negotiations with the Moroccan government to establish a lithium hydroxide refinery, a project initially announced in April 2023. According to reports from June 24, the South Korean firm is working with the Moroccan Agency for Investment and Export Development (Amdie), led by Ali Seddiki, to finalize the industrial framework and site requirements for the facility. The first phase of the investment is valued at 5.5 billion dirhams and is expected to generate over 430 jobs.
Did You Know? The Moroccan National Investment Commission formally designated this lithium project as a strategic operation in June 2025, granting it priority status for administrative processing and public support.
Why the Project Was Paused
The joint venture between LGES and the Chinese firm Yahua was previously suspended due to uncertainty regarding international trade policies. Following the return of Donald Trump to the White House in 2025, the partners halted development to assess potential shifts in U.S. customs regulations. The project was designed to provide a stable supply of raw materials for the North American and European markets by leveraging Morocco’s existing free trade agreements.
The Impact of U.S. Trade Rules
New regulatory constraints have complicated the project’s planning. U.S. authorities have notified Rabat that any product manufactured in Morocco containing more than 25% of inputs from a single third-party country will be subject to the tariff regime of that country. This rule threatens to negate the advantages provided by the U.S.-Morocco free trade agreement if the lithium hydroxide is processed using a high volume of Chinese-sourced materials.
Expert Insight: Samantha Carter notes that the 25% threshold creates a delicate balancing act for LGES and Yahua. To maintain the “Moroccan origin” status required for benefits under the U.S. Inflation Reduction Act and the European Union’s Critical Raw Materials Act, the companies must carefully calibrate their supply chain and the origin of their chemical inputs, effectively forcing a restructuring of their initial industrial strategy.
What Happens Next
The future of the refinery depends on the outcome of ongoing discussions regarding input distribution and industrial responsibilities. While the exact location and construction timeline remain unconfirmed, a bilateral working group between Morocco and South Korea is currently accelerating negotiations for a comprehensive economic partnership agreement (CEPA). South Korean trade officials have explicitly requested that Morocco facilitate the completion of the LGES refinery as part of these broader commercial talks.
Frequently Asked Questions
What is the financial scale of the planned lithium facility?
The first phase of the project is estimated at 5.5 billion dirhams, with the objective of creating more than 430 jobs.
Why is the involvement of the Chinese group Yahua significant?
LGES selected Yahua for its expertise in lithium compounds used for high-nickel batteries. As of 2023, Yahua reported an annual production of 43,000 tonnes of lithium and maintains mining interests in Ethiopia and Zimbabwe.
What obstacles remain for the project?
The primary challenges include finalizing the industrial site, establishing a firm construction schedule, and ensuring the project complies with the U.S. 25% input threshold to retain preferential trade status.
How might the final agreement between LGES and Morocco influence the broader development of the electric vehicle battery supply chain in North Africa?