Piedmont Lithium (NASDAQ:PLL) Inc (ASX:PLL, NASDAQ:PLL, XETRA:), which develops lithium resources critical to the US electric vehicle (EV) supply chain, has amended its agreement with Tesla Inc (NASDAQ:NASDAQ:TSLA) to supply the US automaker with spodumene concentrate (SC6) from North American Lithium (NAL).
The two companies have agreed to amend their 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.
New offtake terms
Under the amended agreement, Piedmont will deliver roughly 125,000 tonnes of SC6 to Tesla in the second half of 2023 through the end of 2025.
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.
"Reflects changed landscape"
“We are pleased to be able to partner with Tesla to supply lithium resources produced in North America,” said Piedmont Lithium president and CEO Keith Phillips.
“The electric vehicle and critical battery materials landscape has changed significantly since 2020 and this agreement reflects the importance of – and growing demand for – a North American lithium supply chain.
“This agreement helps to ensure that these critical resources from Quebec remain in North America and support the mission of the Inflation Reduction Act to bolster the US supply chain, the clean energy economy and global decarbonisation.”
Commercial shipments in Q3
Spodumene concentrate production is expected to restart at NAL in the first half of 2023, with first commercial shipments expected to begin in the third quarter of the year.
Piedmont plans to deliver SC6 to Tesla from NAL under Piedmont’s offtake agreement with Sayona Quebec, which entitles Piedmont to purchase the greater of 113,000 tonnes per year or 50% of SC6 production.
Piedmont’s purchases of SC6 from Sayona Quebec are subject to floor and ceiling prices for the life-of-mine term.