Piedmont Lithium amends Tesla agreement for spodumene offtake from North American project

Piedmont Lithium (NASDAQ: PLL) has amended an offtake agreement with Tesla Inc to supply the US automaker with spodumene concentrate from the North American lithium (NAL) mine in Canada.

The amendment comes at a time of significant change within the US electric vehicle and critical battery materials landscape and is believed to reflect growing demand for a domestic lithium supply chain.

Under the terms of the three-year agreement, Piedmont will deliver approximately 125,000 tonnes of spodumene concentrate to Tesla beginning in the second half of this year through to the end of 2025.

The initial term is open to extension for an additional three years.

Pricing of each shipment will be determined by a formula-based mechanism linked to average market prices for lithium hydroxide monohydrate.

Tesla partnership

Piedmont chief executive officer Keith Phillips said the company was pleased to be partnering with Tesla to supply lithium produced in North America.

“This agreement will ensure critical resources from Québec remain in North America to help support the Inflation Reduction Act [which seeks to] promote the US supply chain, a clean energy economy and global decarbonisation,” he said.

Joint venture project

Piedmont owns the NAL mine and concentrator with joint venture partner Sayona Mining (OTCQB: SYAXF).

Sayona retains 75% equity through subsidiary company Sayona Quebec, while Piedmont holds the remaining 25%, plus a 15% stake in Sayona.

Last month, the partners received final permit approvals for a restart of the operation.

Spodumene production

First spodumene concentrate production is expected to commence at NAL before mid-year, with first commercial shipments scheduled for the September quarter.

Initial output will comprise about 220,000t per annum of 6% spodumene concentrate (or 30,000tpa lithium carbonate equivalent).

Piedmont’s offtake agreement with Sayona Quebec entitles it to purchase the greater of 113,000t per year or 50% of production.

Concentrate purchased will be subject to floor and ceiling prices for the life-of-mine term.

Piedmont recognises commercial shipments from NAL as an important milestone to revenue generation.