Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Shares in Australian junior Piedmont Lithium (ASX: PLL) surged almost 84% on Monday in Sydney after it confirmed it had signed a sales agreement with Tesla to supply the electric vehicle maker with high-purity lithium ore mineral for up to ten years.
Piedmont accidentally released the announcement last week, following the hyped “Tesla Battery Days,” but the Australian Stock Exchange said it would not publish it then.
Initial five-year agreement will see Piedmont supplying about a third of its planned 160,000-tonnes-per-year spodumene concentrate from its deposits in North Carolina
The initial five-year agreement will see Piedmont supplying about a third of its planned 160,000-tonnes-per-year spodumene concentrate from its deposits in North Carolina. Both companies can then extend the contract for another five years.
Piedmont president and chief executive officer, Keith Phillips, said the deal represented the start of the first domestic lithium supply chain in the United States.
“We will now accelerate our mine/concentrator development to support Tesla’s plans, work to further expand our mineral resources, and potentially increase our planned annual spodumene concentrate production capacity,” Phillips said in the statement.
The deal is conditional upon both companies agreeing to start deliveries between July 2022 and July 2023, Piedmont Lithium said.
The company, which aims to develop a fully integrated spodumene-to-hydroxide business in North Carolina, is also looking to move those plans forward.
Piedmont’s ultimate goal is to become the world’s only integrated spodumene miner and lithium hydroxide producer outside China.
The company is looking at two chemical plants to produce over 45,000tpa of battery-grade lithium hydroxide.
It already 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.
Tesla chief executive Elon Musk shared last week his vision of novel, proprietary Tesla batteries. He also said it had secured rights to 10,000 acres in Nevada where it aims to produce lithium from clay deposits using a process developed internally.
Tesla stock lost more than $30 billion in market value following the announcements.
The EV maker has also revealed plans to build a lithium hydroxide chemical plant in Austin, Texas. The facility will be adjacent to its Terafactory/Gigafactory 5, under construction since July.
The factory, also known as Giga Texas and Giga Austin, will convert the spodumene Tesla acquires from Piedmont Lithium and other sources.
The company aims to have it up and running by the end of 2021 and it would mark the first move by an automaker into chemical lithium production.
Nevada already has several lithium clay projects under development, including one from Lithium Americas that has been seeking federal permit approval for more than a decade, and another from Ioneer (ASX: INR).
Albemarle (NYSE: ALB) operated the only existing US lithium mine at a site about 322 km (200 miles) north of Las Vegas until it shut it down last month.
