Quebec lithium mine to supply Tesla

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The La Corne lithium mine in Abitibi-Témiscamingue will supply lithium to electric car maker Tesla.

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Piedmont Lithium Inc. announced this week that it has reached an agreement with Tesla for shipments of spodumene, a crude mineral containing lithium, from Sayona Quebec’s mine in La Corne, 35 kilometers north of Val-d’Or , will come.

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“The landscape for electric vehicles and critical battery materials has changed significantly since 2020, and this agreement reflects the importance of — and growing demand for — a North American lithium supply chain,” Piedmont Chief Executive Keith Phillips said in a statement. “This agreement helps ensure these critical Quebec resources remain in North America and supports the Inflation Reduction Act’s mission to strengthen the U.S. supply chain, clean energy economy and global decarbonization.”

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Piedmont has committed to ship approximately 125,000 tonnes of spodumente concentrate to Tesla between the second half of 2023 and the end of 2025.

In June, Piedmont reached an agreement with Sayona to purchase 113,000 tonnes of spodumene or half of La Corne’s production, whichever is greater.

The deal allows Piedmont to fulfill its contract with Tesla while its North Carolina mine is delayed by local opposition.

Production at the La Corne mine is scheduled to begin this year with first deliveries in the third quarter between July and September.

Piedmont owns 25 percent of Sayona Québec, the other 75 percent is owned by the Australian company Sayona Mining.

The three-year contract with Tesla, with an option to extend for a further three years, sets prices using a formula linked to average market prices for lithium hydroxide monohydrate. As a result, Tesla will pay more for the mineral amid an unrelenting price rally.

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The change to the supply agreement between Piedmont and Tesla is “significant” because the EV giant typically has fixed prices for the materials it needs for batteries, according to Cowen & Co. analyst David Deckelbaum -Mail.

Lithium is up 1,200 percent in the past few years as supply has struggled to keep up with rampant demand. This hurts manufacturers who are forced to raise prices. According to BloombergNEF, the average price of a lithium-ion battery increased by seven percent in 2022, the first increase since the group’s survey began in 2010.

Bloomberg contributed to this report.