Australian-based battery minerals company Liontown Resources has executed the definitive full-form offtake agreement with electric vehicle manufacturer Tesla for the supply of spodumene concentrate from its Kathleen Valley Lithium Project in Western Australia.
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.
Liontown is to supply up to 150,000 dry metric tonnes (DMT) per annum of spodumene concentrate, representing approximately one-third of the Lithium Project’s start-up SC6.0 production capacity of around 500ktpa.
The five-year 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 1 December 2025.
Tesla has agreed to purchase 100,000 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.
The offtake agreement with Tesla is the second definitive agreement secured for Kathleen Valley following the foundational offtake agreement with LG Energy Solutions.
Together with the LG Energy Solutions agreement, this means that up to 60 per cent of Liontown’s planned production is now covered by long-term agreements with high-quality customers.
Liontown’s Managing Director and CEO, Tony Ottaviano, said Liontown is pleased to have concluded negotiations with Tesla allowing them to execute the second full form Spodumene Concentrate Offtake Agreement.
“Tesla is a global leader and innovator in electric vehicles and having formalised arrangements for it to become a significant customer is a tremendous achievement,” Mr Ottaviano said.
“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 realising our ambition to become a globally significant provider of battery materials for the clean energy market.”
Liontown continues to receive very strong interest from a range of parties for the remaining third offtake which will, once completed, result in approximately 85 per cent of the production from Kathleen Valley contracted.
The remaining production will be sold on spot or Liontown has an option to sell to existing customers.
