Piedmont Lithium soars after Tesla deal

The Tesla Cybertruck electric vehicle. Credit: Tesla.

Australian junior Piedmont Lithium (ASX: PLL) has confirmed it has signed a sales agreement with Tesla to supply the electric car maker with high-purity lithium ore for up to ten years.

Piedmont accidentally released the announcement last week, following the hyped Tesla Battery Day, but the Australian Stock Exchange said it would not publish it then.

The initial five-year agreement will see Piedmont supplying about a third of its planned 160,000-tonnes-per-year spodumene concentrate from its deposits in North Carolina. Both companies can then extend the contract for another five years.

Piedmont president and chief executive Keith Phillips said the deal represented the start of the first domestic lithium supply chain in the United States.

“We will now accelerate our mine/concentrator development to support Tesla’s plans, work to further expand our mineral resources, and potentially increase our planned annual spodumene concentrate production capacity,” Phillips said in a statement.

The deal is conditional upon both companies agreeing to start deliveries between July 2022 and July 2023, Piedmont Lithium said.

The company, which aims to develop a fully integrated spodumene-to-hydroxide business in North Carolina, is also looking to move those plans forward.

Piedmont’s ultimate goal is to become the world’s only integrated spodumene miner and lithium hydroxide producer outside China.

The company is looking at two chemical plants to produce over 45,000 tonnes per year of battery-grade lithium hydroxide.

It already owns one site in Kings Mountain, North Carolina, and is actively pursuing a site for a second facility, which is expected to be secured by year-end.

Tesla chief executive Elon Musk shared last week his vision of novel, proprietary Tesla batteries. He also said it had secured rights to 10,000 acres in Nevada, where it aims to produce lithium from clay deposits using a process developed internally.

Tesla stock lost more than US$30 billion in market value following the announcements.

The electric vehicle maker has also revealed plans to build a lithium hydroxide chemical plant in Austin, Texas. The facility will be adjacent to its Terafactory/Gigafactory 5, under construction since July.

The factory, also known as Giga Texas and Giga Austin, will convert the spodumene that Tesla acquires from Piedmont Lithium and other sources.

The company aims to have it up and running by the end of 2021, and it would mark the first move by an automaker into lithium chemical production.

Nevada already has several lithium clay projects under development, including one from Lithium Americas (TSX: LAC; NYSE: LAC) that has been seeking federal permit approval for more than a decade.

Albemarle Corp. (NYSE: ALB) operated the only existing U.S. lithium mine at a site about 322 km north of Las Vegas until it shut it down in August.

— This article first appeared on MINING.com, part of Glacier Resource Innovation Group.


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