Piedmont Lithium amends its offtake agreement with Tesla

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(Kitco News) - Piedmont Lithium (Nasdaq: PLL) announced Tuesday that it has amended its agreement with Tesla, Inc. to supply the U.S. automaker with spodumene concentrate ("SC6") from North American Lithium ("NAL").

According to a company press release, Piedmont and Tesla have mutually 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.

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 company said that the pricing received by Piedmont under the agreement with Tesla will be determined by market prices at the time of each shipment.

"We are pleased to be able to partner with Tesla to supply lithium resources produced in North America," stated 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 U.S. supply chain, the clean energy economy, and global decarbonization."

Importantly, the company noted that spodumene concentrate production is expected to restart at NAL in H1 2023, with first commercial shipments expected to begin in Q3 2023. Piedmont plans to deliver SC6 to Tesla from NAL under Piedmont's offtake agreement with Sayona Quebec.

Piedmont Lithium indicated it is developing a world-class, multi-asset, integrated lithium business focused on enabling the transition to a net zero world and the creation of a clean energy economy in North America. The company's goal is to become one of the largest lithium hydroxide producers in North America.