Piedmont Lithium amends agreement with Tesla; sourcing SC6 from Québec operation
04 January 2023
Piedmont Lithium (earlier post) has amended its earlier agreement with Tesla to supply the US automaker with spodumene concentrate (SC6) from North American Lithium (NAL).
North American Lithium is a brownfield open pit mining and spodumene concentrator operation in Québec owned 75% by Australia-based Sayona Mining and 25% by Piedmont. In December 2022, NAL was issued the last remaining permit required to restart operations at the site. Receipt of the key permit from Canada’s Department of Fisheries and Oceans paves the way for an expected restart of spodumene concentrate production at NAL in H1 2023.
Piedmont holds an offtake agreement for the greater of 113,000 tons per year or 50% of spodumene concentrate production from NAL at a ceiling price of US$900 per metric ton on a life-of-mine basis. Piedmont plans to deliver SC6 to Tesla from NAL under Piedmont’s offtake agreement with Sayona Québec.
In 2020, Piedmont had entered into a binding agreement with Tesla for the supply of SC6 from Piedmont’s planned wholly-owned Gaston County, North Carolina operation. The agreement was for an initial five-year term on a fixed-price binding purchase commitment from the delivery of first product, and represented approximately one-third of Piedmont’s planned SC6 production of 160,000 tonnes per annum for the initial five-year term as well as an additional quantity to be delivered at Tesla’s option.
The agreement was conditional upon Tesla and Piedmont agreeing to a start date for spodumene concentrate deliveries between July 2022 and July 2023 based on the development schedules of both parties. At the time, Piedmont had envisioned starting production by July 2022; however, the company ran into permitting delays and obstacles, and has yet to begin development of its Carolina Lithium operation.
Piedmont and Tesla now have now mutually agreed to amend the previous offtake agreement with the terms of this new agreement, which are binding for a three-year term and include an option to renew for another three years. Under the amended agreement, Piedmont has agreed to deliver approximately 125,000 metric tons of SC6 to Tesla beginning in H2 2023 through the end of 2025.
According to the terms, the SC6 pricing will be determined by a formula-based mechanism linked to average market prices for lithium hydroxide monohydrate throughout the term of the agreement. The pricing received by Piedmont under the agreement with Tesla will be determined by market prices at the time of each shipment.
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