The deal, Liontown’s second main contract for its Kathleen Valley lithium challenge in two months, despatched its shares up almost 20% on the information, closing A$1.64 on Wednesday.
Pricing will likely be decided by a “formula-based mechanism” primarily based off market costs for lithium hydroxide monohydrate, the corporate mentioned.
The take care of Tesla is the second off-take settlement the Australian lithium producer has struck this yr, after inking a similar contract with South Korea’s LG Chem in January.
“We now have two of the premier firms within the international lithium-ion battery and EV house signed up as foundational clients, marking a major step in direction of realizing our ambition to develop into a globally important supplier of battery supplies for the clear power market,” chief government and managing director Tony Ottaviano said in the statement.
RELATED: Lithium price hits ‘ludicrous mode’ as battery metal extends 400% gain
Development of the A$473 million ($338m) Kathleen Valley mine is ready to start within the second quarter of this yr, with first manufacturing anticipated in 2024. It will likely be Western Australia’s second main lithium mine, following Wesfarmers and SQM’s Mount Holland project, which can also be beneath building.
The quantity of lithium promised to Tesla is equal to a few third of the challenge’s 511,000-tonne annual manufacturing capability.
Costs for the commodity, key for manufacturing the batteries that energy EVs, shot to a file final yr, rising market deficit issues.
Many of the world’s present lithium output is locked away in long run offers as downstream chemical substances producers, battery makers and EV firms are frantically making an attempt to safe future provide.
The world’s prime automakers, from Tesla to Volkswagen to Toyota, have mentioned they want an ever-growing provide of battery supplies to speed up the roll-out of EVs.
Specialists anticipating demand for the battery steel coming from the sector will account for almost three quarters of its consumption by 2030, up from 41% in 2020.
RELATED: Lithium supply crunch Part II – this time it’s for real
They’ve additionally warned that the world’s scarcity of lithium would final for one more three years not less than, however with the recent cancellation of Rio Tinto’s (ASX: RIO) Jadar project in Serbia, the shortfall would now final for a number of years.
Tesla additionally has a lithium supply deal with China-based Ganfeng Lithium (SHE: 002460), which grants the automaker a three-year provide of battery-grade lithium, beginning in 2022. The EV icon additionally has agreements with BHP (ASX: BHP) for nickel and Mozambique-focused Syrah Resources (ASX: SYR) for graphite.
