Another Australian lithium producer inks supply deal with Tesla

One of Australia’s emerging lithium producers has secured an off-take deal with global battery and electric vehicle giant Tesla and has future expansion plans in its sights.

In an update to the ASX on Wednesday, Core Lithium said it has signed a legally binding term sheet with Tesla for the supply of lithium spodumene concentrate for processing as an input into Tesla’s lithium-ion battery production.

Under the deal, Core Lithium will supply Tesla with up to 110,000 tonnes of the lithium spodumene concentrate over four years, with Tesla committing to support the Australian company with the development of a proposed chemical processing capacity.

The lithium product will be supplied from Core Lithium’s Finniss project, which is being developed just south of Darwin in the Northern Territory.

While production from the project has not yet commenced – it is expected to begin before the end of 2022 – last year Core Lithium published the results of a definitive feasibility study into the project, which found it had the capacity to produce up to 173,000 tonnes a year of lower cost and high quality raw lithium material.

Following the announcement of the Tesla deal, Core Lithium shares jumped by more than 15 per cent, mid-way through Wednesday’s trading.

Core Lithium’s largest shareholder and existing off-take partner are the Chinese based Sichuan Yahua Industrial Group. Last year, the Yahua group announced that it had also secured a deal to supply battery-grade lithium hydroxide for use in battery manufacturing.

The Yahua group has also agreed to purchase 75,000 tonnes of lithium concentrate from Core Lithium.

Core Lithium managing director Stephen Biggins said the latest deal was the first stage of what he hopes will be a longer relationship with the electric vehicle and battery storage giant.

“Core Lithium is thrilled to have reached this agreement with Tesla and look forward to further growing this relationship in the years to come,” Biggins said.

“Tesla is a world- leader in electric vehicles and its investment in off-take and interest in our expansion plans for downstream processing are very encouraging.”

Securing low cost supplies of raw battery materials, such as lithium, has emerged as a challenge for battery manufacturers as the sector booms. It is no surprise that Tesla has sought direct deals with lithium producers to secure future supply chains.

Core Lithium said that it is exploring the expansion of the Finniss project, including the development of ‘downstream’ processing facilities, to convert the raw lithium spodumene concentrate produced at the project into higher-value material for use in battery production.

Core Lithium said that it expects to finalise the negotiation of the off-take agreement with Tesla by August, with deliveries scheduled to commence before July 2023.

Tesla has also secured lithium supply deals with Australian and Nasdaq-listed lithium miner Piedmont Lithium, and from an upcoming mine in Australia developed by Liontown.