Tesla signed a 5-year lithium supply deal with Liontown Resources, which is expected to commence in 2024. Liontown will supply Tesla with Lithium Spodumene Concentrate from the battery metal company’s new AU$473 million ($338M) Kathleen Valley Lithium Project in Western Australia.
“Australian-based battery materials company Liontown Resources Limited (ASX: LTR) is pleased to announce that it has entered into a legally binding sales and purchase term sheet with electric vehicle manufacturer Tesla for the supply of spodumene concentrate,” announced the Australian company.
Tesla will purchase 100,000 dry metric tonnes (DMT) of lithium in the first year of the deal and increase the order by 150,000 DMT per year in the following years. A formula based on market prices for Lithium Hydroxide Monohydrate will decide the purchase price of the lithium supply.
The Tesla-Liontown agreement is conditional, based on when the Australian company starts commercial production at the Kathleen Valley Lithium Project. Liontown aims to begin commercial production by 2025. Tesla and Liontown will complete negotiations and execute a detailed, definitive agreement by May 30, 2022. If the two parties do not finish negotiations, the lithium supply deal will be terminated.
Liontown is also a partner of LG Energy Solution. Earlier this month, the mining company congratulated LGES on its IPO. According to Reuters, Liontown has a lithium supply deal with LG Energy Solution.
Tesla also has a lithium supply deal with GFL International Co Ltd, part of China-based Ganfeng Lithium Co Ltd. According to the agreement, Tesla will receive a supply of battery-grade lithium from GFL Internationa Co Ltd for three years, starting in 2022.