Liontown Resources Limited (ASX:LTR) secured an Offtake Agreement with Ford after signing lithium supply deals with Tesla and LG Energy Solutions. Liontown describes itself as an emerging Tier 1 battery minerals producer.
As per the Agreement, Liontown will supply up to 150,000 dry metric tonnes (DMT) per annum of spodumene concentrate or lithium ore to Ford for lithium-ion battery production. The deal is expected to commence in 2024, with 75,000 DMT in its first year, 125,000 DMT in its second year, and 150,000 DMT in its third to fifth years.
Liontown’s spodumene concentrate will come from its Kathleen Valley Lithium Project in Western Australia. The agreement also stated that Ford would provide a AU$300 million ($207 million) debt facility to Liontown through one of the automaker’s subsidiaries. The proceed will partially fund the development costs of Kathleen Valley.
Ford’s agreement with Liontown is the third and final foundation offtake the company required to start developing Kathleen Valley. The Australian company has also secured deals with Tesla and LG Energy Solution (LGES).
In May 2022, Liontown town signed an agreement with Tesla battery supplier LGES for 150,000 DMT per annum of spodumene concentrate. LGES plans to produce Tesla’s 4680 battery cells and increase the production of its 2170 batteries.
Tesla also signed a 5-year lithium supply deal with Liontown earlier this year. Tesla and Lionwtown’s deal is expected to commence in 2024, similar to Ford’s Offtake Agreement with the battery minerals producer. Tesla agreed to purchase 100,000 DMT of lithium in the first year of its deal with Liontown and increase the order by 150,000 DMT in the following years. The Tesla-Liontown agreement is conditional, based on when the Australian company starts commercial production in its Kathleen Valley.
Liontown’s Board made a Final Investment Decision (FID) to proceed with the development of Kathleen Valley, following its deal with Ford. Kathleen Valley’s first production of spodumene concentrate is scheduled for Q2 2024.
Read about the Liontown Board’s FID below.