LG Energy Solution (LGES) has resumed negotiations for a lithium hydroxide refinery in Morocco in partnership with the Chinese group Yahua, according to reports published June 24. The project, which involves a planned initial investment of 5.5 billion dirhams and the creation of over 430 jobs, is currently under review by the Moroccan Agency for Investment and Export Development (Amdie), led by Ali Seddiki.
Did You Know? The Moroccan government designated this lithium project as a “strategic” operation in June 2025, a status that grants it priority for public administrative processing and support.
How the project aims to secure supply chains
LGES intends for the Moroccan facility to serve as a key node in its global supply chain, specifically targeting the North American and European markets. By establishing a refinery in Morocco, the South Korean firm aims to leverage the kingdom’s existing free trade agreements to maintain access to these regions. The project was originally announced on April 5, 2023, but faced delays following the 2024 U.S. presidential election, as partners waited for clarity on American trade policy.
Why the 25% U.S. threshold matters
New trade regulations from the U.S. administration serve as a primary hurdle for the project’s success. According to reports, the U.S. has notified Moroccan authorities that any product manufactured in the kingdom containing more than 25% of inputs from a single third country will be subject to the trade regime applied to that country. This creates a risk for the joint venture, as a high reliance on Chinese materials could cause the lithium hydroxide to lose its preferential trade status, despite being processed in Morocco.
Expert Insight: The success of this venture hinges on a difficult balancing act. LGES must reconcile the technical expertise of its Chinese partner, Yahua, with the strict “rules of origin” required to benefit from the U.S. Inflation Reduction Act (IRA) and the European Union’s Critical Raw Materials Act (CRMA).
What happens next
Negotiations between Seoul and Rabat are accelerating, with both governments establishing a working group to discuss a comprehensive economic partnership agreement (CEPA). During meetings held June 11–12, South Korean trade officials formally requested that Morocco facilitate the progress of the LGES refinery. While the parties are actively discussing industrial assembly and safety guarantees, the specific location of the plant and a definitive construction timeline remain to be finalized.
Frequently Asked Questions
What is the primary goal of the LGES-Yahua project in Morocco?
The project aims to produce lithium hydroxide to support the manufacturing of high-density energy batteries, specifically to ensure a stable supply of raw materials for North American and European electric vehicle markets.
How many jobs will the project create?
The first phase of the investment is expected to create more than 430 jobs, according to economic sources cited in June 2025.
Why was the project previously suspended?
Partners suspended their efforts following the return of Donald Trump to the White House in 2025, pending a clearer understanding of potential changes to U.S. customs and trade policies.
How might the 25% input threshold influence the selection of suppliers for this facility?
