Piedmont has committed to delivering about 125,000 metric tonnes of spodument concentrate to Tesla between the second half of 2023 and the end of 2025.
The La Corne lithium mine in Abitibi-Tmiscamingue will supply lithium to electric car manufacturer Tesla.
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Piedmont Lithium Inc. announced this week that it has reached an agreement with Tesla so shipments of spodumene, a raw mineral that contains lithium, will come from Sayona Quebec’s mine in La Corne, 35 kilometres north of Val-d’Or.
“The electric vehicle and critical battery materials landscape has changed significantly since 2020 and this agreement reflects the importance of — and growing demand for — a North American lithium supply chain,” Piedmont chief executive Keith Phillips said in a statement. “This agreement helps to ensure that these critical resources from Quebec remain in North America and support the mission of the Inflation Reduction Act to bolster the U.S. supply chain, the clean energy economy, and global decarbonization.”
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Piedmont has committed to delivering about 125,000 metric tonnes of spodument concentrate to Tesla between the second half of 2023 and the end of 2025.
In June, Piedmont reached a deal with Sayona to acquire 113,000 tonnes of spodumene or half of the La Corne production, whichever was higher.
The deal allows Piedmont to fulfill its contract with Tesla while its North Carolina mine is delayed by local opposition.
Production at the La Corne mine is set to begin this year, with the first deliveries in the third quarter, between July and September.
Piedmont holds 25 per cent of Sayona Qubec, with the other 75 per cent held by Australia’s Sayona Mining.
The three-year agreement with Tesla, with an option to renew for another three years, sets prices using a formula linked to average market prices for lithium hydroxide monohydrate. As a result, Tesla will be paying more for the mineral, amid a relentless price rally.
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The change in the supply agreement between Piedmont and Tesla is “significant” because the EV giant typically has fixed prices for the materials it needs for batteries, according to analyst David Deckelbaum at Cowen & Co. “As more contracts shift toward variable pricing, Tesla’s lithium costs inevitably move higher,” Deckelbaum said in an email.
Lithium has soared 1,200 per cent over the past several years as supply has struggled to match rampant demand. That’s hurt manufacturers, which have been forced to raise prices. The average price for a lithium-ion battery pack jumped seven per cent in 2022, according to BloombergNEF, the first increase since the group began their survey in 2010.