Australian lithium producer Liontown Resources said on Wednesday it had signed a five-year agreement with Tesla to supply Tesla with the lithium concentrate, Reuters reported. Shares in Liontown Resources jumped nearly 20% on the news.
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Specifically, starting in 2024, Tesla will purchase 100,000 dry metric tons (DMT) of lithium concentrate in the first year and increase to 150,000 dry metric tons per year in subsequent years.
As automakers transition to electrification and suppliers scramble to meet demand, lithium prices have surged over the past few years and are said to be about eight times what they were at the start of 2021.
Liontown Resources will supply lithium from its Kathleen Valley lithium project in Western Australia, which is expected to begin commercial production in 2025, and supply Tesla with about one-third of the project’s annual capacity.
Earlier this year, Liontown Resources had signed a five-year lithium concentrate supply agreement with LG New Energy for a period from 2024 to 2028. Under the agreement, Liontown Resources will supply a total of 700,000 tons of lithium concentrate to LG New Energy.