On Wednesday, in a statement Australia’s Liontown Resources said it has signed a five year agreement with Tesla to supply lithium spodumene concentrate for its electric cars.
With the news reaching the market, shares of lithium miner’s went up by nearly 20%.
In the first year starting from 2024, Tesla will buy 100,000 dry metric tonnes (DMT) of the concentrate and will increase it to 150,000 DMT per year subsequently.
In the last few years, lithium prices have soared with suppliers scrambling to meet demand as automakers increase production of electric vehicles. Lithium prices have increase by about 8 times than they were at the start of 2021.
Liontown will supply lithium from its flagship Kathleen Valley Lithium project in Western Australia that is expected to begin commercial production by 2025.
The supply to Tesla will account for about a third of the project’s annual production capacity.
Liontown shares jumped as much as 19.8% to A$1.665, their biggest intraday jump since Sept. 13, 2021.
($1 = 1.3986 Australian dollars)