On February 16, Australian lithium miner Liontown Sources announced the signing of a five-year agreement with global electric vehicle giant TSLA.US for the supply of spodumene concentrate. After the news was announced, Liontown stock price soared nearly 20%.
Screenshot of Liontown Sources' official website
Under the agreement, Liontown will begin supplying spodumene concentrate to Tesla in 2024. Tesla will purchase 100,000 dry metric tons (DMT) of spodumene concentrate in the first year and increase it to 150,000 dry metric tons per year in subsequent years. Tesla's orders account for about one-third of the annual capacity of the Kathleen Valley lithium project after it is put into operation.
The spodumene concentrate supplied to Tesla comes from the Kathleen Valley project. The project is scheduled to be commercially produced by 2025 and is expected to achieve a capacity of 500,000 tonnes of SC6.0 per annum at a grade of 6%.
Liontown Sources is an Australian-listed lithium company with projects including the Kathleen Valley Lithium Mine, the Buldania Lithium Mine and the Moora Gold Mine. The Kathleen Valley lithium project is located in one of the best mining areas in Western Australia and is one of the highest grade underground lithium mines in the world. According to liontown's official website, the estimated mineral resources (MRE) measured, indicated and inferred by the project reach 156 million tonnes at a Grade of 1.4% Li2O, corresponding to a Li2O content of 2.14 million tonnes.
Kathleen Valley lithium mine
Last month, Liontown signed a five-year lithium ore supply agreement with South Korea's LG Energy Solutions (LGES). Under the agreement, Liontown will supply LG with a total of 700,000 tonnes of lithium concentrate. When operational in 2024, Liontown will supply LGES with 150,000 dry metric tons of spodumene concentrate per year. LG's orders account for about a third of Kathleen Valley's production after it goes into production.
This means that if Tesla and Liontown successfully reach a final agreement, the Kathleen Valley project will have tesla and LGES booked about two-thirds of the production before it starts.
Liontown revealed in its partnership with LGES that the company is continuing negotiations with other potential Tier 1 global customers. After signing the order with Tesla, Liontown again said, "Tesla belongs to the first echelon of companies downstream in its value chain, in line with its offtaking strategy, and the company will also negotiate with other potential and customers about the remaining production." ”
Recent stock price movements in LiontownResources
The agreement shows that the pricing of the lithium concentrate sold by Liontown will refer to the market price of lithium hydroxide monohydrate. Over the past few years, lithium prices have soared as automakers have tilted toward an electrification strategy, about 8 times higher than in early 2021.
With the rapid development of the new energy automobile industry, lithium prices have risen to new highs in recent years. According to data from Shanghai Nonferrous Metals Network, the price of battery-grade lithium carbonate and lithium hydroxide rose by 10,000 yuan in a single day on February 14. The average price of battery-grade lithium carbonate exceeded 400,000 yuan / ton, and the spot quotation on December 16 was 418,000-426,000 yuan / ton, and the average price reached 422,000 yuan / ton.