Australia’s Core Lithium signs four-year supply deal with Tesla

Adelaide-headquartered miner Core Lithium this week announced it had signed a legally binding term sheet with global battery and electric vehicle (EV) manufacturer Tesla for the supply of lithium spodumene concentrate from its Finniss lithium project being developed in the Northern Territory (NT).

Core said it would supply Tesla, which expects to spend more than $1 billion a year on raw materials from Australia for its batteries, with up to 110,000 dry metric tonnes (DMT) of spodumene concentrate for processing over four years.

Core commenced construction on the Finniss mine, located about 80 kilometres south-west of Darwin, in October 2021 and expects to produce its first lithium concentrate in the final quarter of this year. The supply to Tesla is expected to commence in the second half of 2023.

Tesla has agreed, subject to execution of a definitive agreement, to support those plans and incorporate the product into its battery supply chain.

The term sheet remains subject to the parties completing negotiations and execution of a definitive product purchase agreement by August 2022 but Core Lithium managing director Stephen Biggins said on Wednesday he is thrilled to have reached agreement with Tesla.

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

Biggins said the Tesla deal builds on other offtake agreements secured with China-based companies Ganfeng Lithium and the Yahua Group.

Core said those agreements account for about 80% of the mine’s expected output over the first four years of production.

The offtake agreement is just the latest for Tesla which has looking to secure future supply as the demand for critical battery metals such as lithium, nickel and cobalt accelerates due to the rise in popularity of EVs and battery energy storage systems.

In January, the EV giant Tesla signed an offtake deal with Melbourne-based miner Syrah Resources to supply battery-ready graphite from its U.S. production facility in Louisiana, for four years.

In February, Tesla signed a five-year deal to secure lithium from Perth-based company Liontown Resources.

Liontown will supply Tesla with lithium from its Kathleen Valley project being developed about 400 kilometres north of Kalgoorlie. The mine is expected to begin commercial production in the first half of 2024.

Tesla will buy 100,000DMT of the concentrate in the first year starting 2024, increasing to 150,000DMT per year in subsequent years.

The supply to Tesla will account for about a third of the project’s annual production capacity.

Liontown has also executed an offtake term sheet for Kathleen Valley with Korean electronics giant LG, which has secured up to 150,000DMT of spodumene concentrate per annum

“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 chief executive Tony Ottavian said.

“Our shareholders should be proud that future Tesla cars will be powered by Liontown lithium.”