Tesla inks deals to secure future supply of critical battery metals, adds another lithium contract

Tesla has recently been expediting deals to secure future supplies of critical battery metals at upcoming mines, and it is now adding another lithium contract with a new mine in Australia.

With the rise in popularity of electric vehicles, several critical materials for battery production, such as nickel, lithium and cobalt, are becoming impediments to increasing overall EV production capacity.

To encourage new production to come online, battery makers and automakers are starting to sign contracts and off-take agreements with junior mining projects that are not yet in production.

This helps these projects secure financing to put the mines into production, which is an extremely capital-intensive process.

In January, Tesla signed just such a deal to secure nickel from a new mine in the US.

At the time, we expected more deals of this type from Tesla in the near future as the race to secure critical battery metals intensifies.

Tesla ended up inking another deal with an upcoming lithium mine developed by Leontown in Australia.

Now the automaker is heading back to Australia to secure lithium again – this time to a new lithium mine in the Northern Territory developed by Core Lithium.

The Australian company announced the deal today:

“Australia’s next lithium producer, Core Lithium Limited (ASX: CXO) (Core or Company), is pleased to announce that it has entered into a legally binding term with Tesla, Inc. (Tesla) for supplies of up to 110,000 tonnes. Sheet entered in. Pricing of Li2O Spodumene Concentrate from the Finis Lithium Project over a period of 4 years, in terms of market value for Spodumene Concentrate, subject to price floor and ceiling (term sheet).

This secures Tesla a significant supply of lithium, and it comes with risks. Because it is from an upcoming mine, the risk is limited as the project is fully funded and fairly advanced.

Core Lithium says production is expected to begin in Q4 2022:

“This follows the company’s recent announcement (see ASX announcement of 30 September 2021) that the Board has made a final investment decision to begin development of the company’s wholly owned Finis project, located near Darwin in the Northern Territory. Through the first lithium concentrate production scheduled for Q4 2022, the company is fully funded to deliver the Finis project, which has started construction.”

However, the deal with Tesla will start only in the second half of 2023.

Again, we should expect Tesla and other companies to continue making more of those agreements in the near future to encourage more new projects in an effort to avoid major supply chain issues of raw battery materials during the second half of the decade. can get help.

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