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Australia’s Liontown signs 5-year lithium supply deal with Tesla

Beginning in 2024, Tesla will purchase 100,000 dry metric tonnes (DMT) of the concentrate, escalating to 150,000 DMT per year in succeeding years.

Liontown Resources, based in Australia, announced on Wednesday that it had secured a five-year arrangement with Tesla to supply the electric vehicle with lithium spodumene concentrate, driving the lithium miner’s stock up about 20%. Beginning in 2024, Tesla will purchase 100,000 dry metric tonnes (DMT) of the concentrate, escalating to 150,000 DMT per year in succeeding years.

Lithium prices have risen dramatically in recent years, with suppliers racing to keep up with demand as manufacturers shift their focus to electric vehicles. Prices are approximately eight times greater than they were at the beginning of 2021.

The lithium will come from Liontown’s flagship Kathleen Valley Lithium project in Western Australia, which is anticipated to start commercial production in 2025.

About a third of the project’s annual manufacturing capacity will be supplied to Tesla. From the project, Liontown has already secured a lithium supply agreement with LG Chem’s battery division in South Korea.

Liontown’s stock rose as much as 19.8% to A$1.665 in one day, the highest intraday gain since September 13, 2021.