Perth-based miner Liontown Resources has formalised an offtake agreement to supply United States-based electric vehicle manufacturer Tesla with up to 150,000 tonnes of lithium spodumene concentrate from the Kathleen Valley high-grade lithium project being developed in Western Australia.
Under the agreement, Liontown will supply Tesla, which expects to spend more than $1 billion a year on raw materials from Australia for its batteries, with 100,000 dry metric tonnes in the first year of the five-year deal, increasing to 150,000 tonnes per annum in subsequent years.
ASX-listed Liontown said supply of the spodumene concentrate, a critical mineral used in the production of lithium-ion batteries, is expected to commence in 2024, and the agreement is subject to the company commencing commercial production at Kathleen by no later than December 1, 2025.
Liontown managing director and chief executive officer Tony Ottaviano said the Tesla agreement represents approximately one-third of the project’s start-up production capacity.
“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,” he 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’s latest deal complements its existing agreement to supply South Korean electronics giant LG Energy Solution with up to 150,000 tonnes per year.
The Kathleen Valley project, being developed near Leinster, about 680 kilometres north-east of Perth, is expected to initially produce about 500,000 tonnes of spodumene concentrate per annum, eventually ramping up to about 660,000 tonnes. Construction of the project is scheduled to commence by the fourth quarter of 2022.
Liontown said up to 60% of its planned production is now covered by long-term agreements with high-quality customers.
The company said it continued to receive strong interest from a range of parties for the remaining third offtake which, once completed, would result in about 85% of production from Kathleen Valley being contracted. The remaining production will be sold on spot or Liontown has an option to sell to existing customers.
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