Piedmont Lithium to supply Tesla with spodumene concentrate from North Carolina project

Piedmont Lithium Tesla supply spodumene concentrate North Carolina project ASX PLL
Tesla has agreed to purchase at least one-third of Piedmont’s anticipated annual spodumene concentrate production from its North Carolina project.

US-focused Piedmont Lithium (ASX: PLL) has collared a binding sales agreement to supply electric vehicle heavy-weight Tesla with its proposed spodumene concentrate product from its namesake North Carolina project.

The deal is initially for five years on a fixed-price basis and can be extended a further five years by mutual agreement.

Piedmont noted the agreement with Tesla covers a fixed commitment for approximately one-third of its planned 160,000 tonne per annum spodumene production.

Tesla also has the option to purchase more.

Piedmont expects the fixed-price commitment will deliver between 10-20% of its total revenues for its proposed integrated mine-to-hydroxide project over the first five years.

Commenting on the deal, Piedmont president and chief executive officer Keith Phillips said it represents the start of the first US domestic lithium supply chain – disrupting the current value chain.

“The agreement highlights the strategic importance of Piedmont’s unique American spodumene deposit and confirms the trend towards spodumene as the preferred feedstock for the lithium hydroxide required in high-nickel batteries.”

Mr Phillips said Piedmont will now fast-track its mine and concentrator development to support Tesla’s plans.

He added the company will also further expand spodumene resources and evaluate increasing its planned spodumene concentrate production capacity.

First spodumene concentrate delivery dates are yet to be set but the duo anticipates this will be some time between July 2022 and July 2023.

Lithium hydroxide plans

Although Piedmont’s plans include producing spodumene concentrate, its strategy is to become an integrated miner and lithium hydroxide generator for the North American and European markets.

As mining plans advance, Mr Phillips noted the company’s lithium hydroxide strategy will also be progressed.

This strategy involves using its own spodumene and that sourced from the global market to generate lithium hydroxide chemicals in the US.

Piedmont pointed out following this path will make it the world’s only integrated spodumene miner and lithium hydroxide producer outside China.

A pre-feasibility study was published in May that estimated capital expenditure of US$377 million would be required to develop a plant that could generate 22,700tpa of lithium hydroxide for 25-years.

Ultimately, Piedmont is looking at two chemical plants to produce over 45,000tpa of battery-grade lithium hydroxide.

Piedmont 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.

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Lorna has more than 10 years' experience as a finance journalist and editor. She has written for numerous industry publications reporting on various sectors, including: resources, energy, construction, biotech, pharma, science and technology, agriculture, and chemicals. Specialising in resources, Lorna has also covered a myriad of small and large cap ASX and dual-listed stocks.