Tesla & Liontown Sign Full-Form Agreement for Supply of Lithium

Photo: Tesla

Tesla and Liontown officially announce the signing of a deal for the supply of lithium. The miner must start mining no later than December 1, 2025, selling almost a third of the mined lithium to the manufacturer.

Tesla and Australian company Liontown have announced the signing of a full-form agreement to supply spodumene concentrate from the Kathleen Valley lithium mining project in Western Australia. This came after the end of May; the signing of the deal was delayed for one week, to clarify some details.

Liontown is to supply up to 150,000 dry metric tons (DMT) per annum of spodumene concentrate, representing approximately one-third of the Project's start-up SC6.0 production capacity of ~500ktpa. Supply is expected to commence in 2024 and the Offtake Agreement is conditional upon Liontown commencing commercial production at the Kathleen Valley Lithium Project by no later than December 1, 2025.

The full agreement form expands on the details of the material terms that were announced in February 2022. Highlights:

• Liontown and Tesla have executed the definitive full-form agreement (Offtake Agreement) for the supply of spodumene concentrate from the Kathleen Valley Lithium Project in WA.
• The full-form agreement expands the detail on the material terms agreed in the binding terms sheet announced on 16 February 2022 and specifies the operational and logistical requirements for the delivery of product.
• Five-year term expected to commence in 2024.
• Tesla to purchase 100,000 dry metric tons (DMT) in the first year, increasing to 150,000 DMT per year in subsequent years.
• Pricing is determined using a formula-based mechanism referencing market prices for battery-grade Lithium Hydroxide Monohydrate.

Liontown's Managing Director and CEO Tony Ottaviano commented:

“We are pleased to have concluded negotiations with Tesla allowing us to execute our second full form Spodumene Concentrate Offtake Agreement. Tesla is a global leader and innovator in electric vehicles and having formalized arrangements for it to become a significant customer is a tremendous achievement. This means that we now have two of the premier companies in the global lithium-ion battery and EV space signed up as foundational customers, marking a significant step towards realizing our ambition to become a globally significant provider of battery materials for the clean energy market.”

© 2022, Eva Fox | Tesmanian. All rights reserved.

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