Australian mining company Piedmont Lithium announced on Monday that it has signed a five-year supply deal with Tesla. Under the terms of the two companies’ agreement, Piedmont will supply about a third of its concentrated production of 160,000 tons per year of spodumene from its North Carolina mines to the US electric vehicle maker.
In a press release, Piedmont indicated that while its initial agreement with Tesla is set for five years, both companies have an option to extend the contract for another five years. The Australian mining company added that while its initial agreement with Tesla accounts for about a third of the output of its North Carolina mine which is expected to be 160,000 tons per year, more lithium could be delivered to Tesla if needed.
Tesla lithium deliveries could begin between July 2022 and July 2023 based on Tesla and Piedmont development schedules. In a statement, Keith Phillips, President and CEO of Piedmont Lithium, expressed his happiness with the Tesla deal. Phillips also indicated that Piedmont would speed up mining development in order to support Tesla’s plans.
“We are excited to work with Tesla, which marks the start of the domestic lithium supply chain in the United States and disruption of the current value chain. The agreement highlights the strategic importance of the unique American spodumene deposits in Piedmont and confirms the trend towards spodumene as the preferred feedstock for the lithium hydroxide required in high batteries Nickel.
“We will now accelerate mine / condensate development to support Tesla’s plans, work to increase our mineral resources, and possibly increase our planned annual production capacity of spodumene. At the same time we will develop our plans to produce lithium hydroxide in North Carolina, using a mixture of Concentration of internally produced spodumene in addition to materials sourced from other producers around the world. “
The Tesla deal appears to have been appreciated by Australian mining company shares. Following its announcement, Piedmont Lithium shares were up 83%.
Tesla’s battery cell production initiative has captured the attention of the electric vehicle sector. During the company’s Battery Day event, Tesla outlined its cell production program, which includes a ground-based redesign of the batteries used in the company’s vehicles and energy storage products. The result of Tesla’s efforts was the Roadrunner cell, which adopts the 4680 form factor, allowing it to have 5 times the size of the 2170 cells used in the Model 3 and Model Y.
But for Tesla to meet its battery production goals, it will have to strike a deal with companies like Piedmont Lithium, which can supply the electric vehicle maker with the materials needed to produce battery cells. Previous reports indicated that the company was already securing partners to drive battery production. Aside from Piedmont Lithium, for example, reports have indicated that Tesla is in talks with Canadian mining company Giga Metals about developing a low carbon nickel mine, which will also be built in North America.
Piedmont Lithium press release can be accessed below.
Piedmont Lithium Deal By Simon Alvarez on Scribd