Tesla and Core Lithium agreed to extend their lithium offtake agreement. Core Lithium made the announcement on Monday, August 29, 2022 (AEST) according to Kalkine Media. The two companies agreed to extend the offtake term sheet until October 26, 2022, which will allow both to finalize discussions for the binding offtake agreement.
Under the agreement, Core Lithium will provide Tesla with up to 110,000 dry metric tonnes of lithium spodumene concentrate produced at its Finnis Lithium Project for four years. Production of the concentrated mineral starts in 2023. Tesla will also support its supplier with the development of lithium chemical processing capacity.
In March, both companies entered into a binding term sheet for the supply of lithium. The term sheet was originally expected to be completed by August 27, 2022. In the earlier press release, Core Lithium’s managing director, Stephen Biggins said that the company was “thrilled” to reach the agreement with Tesla. He also said that they looked forward to growing the relationship.
Lithium market expected to grow
Earlier this month, Grand View Research published a new report stating that the lithium market had not only already doubled in size but that the market is expected to expand further. It’s projected to grow at a compound annual growth rate (CAGR) of 15% from 2022 to 2030.
The report noted that the demand for EVs is projected to boost the volume of lithium-ion batteries and accelerate the market growth with the automotive sector being at the center of that growth. Although there’s plenty of lithium, the limitation lies with the refining industry. Elon Musk brought this up in my own interview with him in July.
“Well, we don’t want to go into the mining industry or the sort of refining industry because the limitation, I think, is actually more. For example, with lithium, it’s more lithium refinement than it is the actual mining. So you better take the ore that contains lithium, and you’ve got to refine it and get it to battery-grade lithium hydroxide or lithium carbonate. And it has to be extremely pure. Otherwise, you could have a breakdown in the cell.”
Note: Johnna is a Tesla shareholder and supports its mission.