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Mining
Global economies are in the thick of a critical mineral arms race for future facing commodities like lithium, nickel, cobalt, and manganese where 90% to 95% of the supply chain simply does not exist.
For starters, to meet the world’s lithium requirements alone would require 74 new mines with an average size of 45,000 tonnes by 2035, according to Benchmark Mineral Intelligence (BMI).
And for the raw materials that are found in places such as the US, Canada, and Australia – you can bet China accounts for most of its processing.
As it stands today, Australia is the global leader in lithium production with brine operations in Chile and Argentina trailing closely behind but when it comes to lithium processing, China dominates, accounting for roughly 60% of the worlds lithium processing.
This is why the restart of the North America Lithium project (NAL) is such a big deal. The 75-25 joint venture project between Sayona Mining (ASX:SYA) and Piedmont (ASX:PLL) represents the only major source of lithium coming online in Canada in the next two years.
In an interview with Stockhead, Piedmont CEO Keith Phillips says he expects the demand for lithium, particularly high-quality lithium hydroxide, to remain strong driven by the growth of the US electric vehicle production market and the electrification of global economies.
As one of three projects under the joint venture, four shipments from NAL totalling up to 120,000 metric tonnes – expected to supply key battery and electric vehicle manufacturers including LG Chem and Tesla – is targeted by the end of 2023.
Unlike prior agreements where prices are locked in, Piedmont’s deal relies on a floating mechanism based on market prices for lithium hydroxide monohydrate throughout the term.
According to Shanghai Metals Market, current lithium spodumene concentrate is sitting at ~$4400 USD/mt.
“Our offtake agreement with Tesla 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,” Phillips explains.
But while Piedmonts deal with Tesla just got real, here are some of the other stocks on the ASX with big automakers signed up.
| Company | Automakers |
|---|---|
| Magnis | Tesla |
| Piedmont | Tesla |
| Syrah Resources | Tesla, Ford |
| Liontown | Tesla, Ford |
| BHP | Tesla, Ford, Toyota |
| RIO | Tesla, Ford, BMW |
| Ioneer | Ford, Toyota |
| Lake Resources | Ford |
| European Lithium | BMW |
| Allkem | Toyota |
| Vulcan | Volkswagen, Renault Stellantis |
| Element 25 | Stellantis |
| Alliance Nickel | Stellantis |
| Arafura Rare Earths | Hyundai Kia |
| Queensland Pacific Metals | General Motors |
| Pilbara Minerals | Great Wall Motor |
(Note: All market cap data pulled from the ASX. Share price price info correct as of April 2.)
Share price: 0.26, Down 51.89% this year
Market cap: $257.63mn
Magnis has signed a deal to supply Tesla with a minimum 17,500tpa of active anode material (AAM) beginning in February 2025 for a minimum term of three years with fixed pricing.
The agreement is conditional on Magnis securing a final location for its commercial AAM facility by June 2023.
Share price: $1.84, Up 4.86% this year
Market cap: $1.13bn
Syrah will supply Tesla with 8,000tpa of AMM from the 11,250tpa Vidalia facility in Louisiana for a period of four years, starting with first commercial production at the site.
Tesla exercised its option to offtake an additional 17,000tpa AMM from Vidalia at a fixed price, subject to the expansion of Vidalia’s production capacity to 45,000tpa AAM.
Syrah says Tesla’s offtake obligation is a key customer commitment for a final investment decision (FID) on the Vidalia expansion, accounting for a combined 56% of the planned production capacity.
The company also has a non-binding MoU with Ford and SK On to evaluate a strategic arrangement, including AAM supply from Vidalia to the BlueOval SK joint venture, with an offtake commencement date of no later than 2028.
Share price: $2.58, Up 21.70% this year
Market cap: $5.69bn
From 2024, Liontown will supply Tesla 100,000 dry metric tonnes (DMT) of spodumene concentrate from the Kathleen Valley project in WA in the first year, increasing to 150,000 DMT per year for the remaining five-year term.
The offtake deal represents about one-third of the project’s start up spodumene concentrate production capacity of ~500ktpa.
In the deal with Ford, Liontown will supply up to 150,000 DMT of spodumene per year for a period of five years once its Kathleen Valley lithium mine kicks off production in 2024.
A $300mn debt facility was also agreed upon for the mine from a Ford unit to further develop the project.
Share price: $47.23, Down 9.97% this year
Market cap: $233.43bn
BHP’s deal with Tesla started in 2022 for the supply of up to 18,000 tonnes of class 1 nickel per year from the Nickel West asset and processed at the company’s new nickel sulphate plant in Kwinana, WA which is expected to produce 100,000 tonnes per year when fully operational.
The two companies will also collaborate on ways to make the battery supply chain more sustainable.
With Ford, BHP has entered into an MoU for nickel supply, which could start as early as 2025 and may involve additional commodities over time.
The company has also inked a deal to supply nickel sulphate to a battery-making joint venture between Toyota Motors and Panasonic – dubbed Prime Planet Energy & Solutions (PPES).
Like its deal with Tesla, BHP has committed to work with PPES on lowering carbon emissions in the battery supply chain.
Share price: $120.14, Down 0.43% this year
Market cap: $43.52b
Rio Tinto and joint venture partner Talon Metals Corp will supply Tesla with 75,000 tonnes of nickel concentrate over a six year period from the Tamarack project in Minnesota.
Under the agreement, Tesla holds the right to negotiate the purchase of nickel concentrate in excess of the initial commitment of 75,000 tonnes.
In its deal with Ford, RIO will supply the automaker with low carbon materials like aluminium, lithium, and copper from its Rincon lithium project in Argentina.
Ford will also explore becoming the foundation customer of Rincon with the two companies set to work towards a significant lithium offtake agreement so support the production of electric vehicles.
RIO has also signed an MoU with BMW for an unspecified amount of “responsibly sourced aluminium” the miner produces from hydro-powered operations in Canada’s Saguenay-Lac-Saint-Jean region.
The deal will kick off in 2024.
Share price: $3.33, Down 62.82% this year
Market cap: $629.50mn
Ioneer’s deal with Ford includes the supply of 7,000tpa of lithium carbonate over a five-year term from its Rhyolite Ridge lithium-boron project in Nevada, starting in 2025.
Ford intends to utilise ioneer’s lithium carbonate to produce batteries for use in Ford electric vehicles through BlueOval SK, the Ford-SK On battery manufacturing joint venture.
In its deal with PPES, Ioneer will supply 4,000tpa of lithium carbonate from Rhyolite Ridge for a period of five years.
Share price: 0.44, Down 81.84% this year
Market cap: $668.54m
Lake’s non-binding MoU with Ford includes the supply of 25,00tpa of lithium from its Kachi project in Argentina.
Both Lake and Ford see this as an opportunity for a potential long-term agreement with the ability to scale up environmentally responsible production and participate in Lake’s other projects to ensure high-quality lithium products are available to Ford.
Share price: 0.068, Down 57.70% this year
Market cap: $98.28m
European Lithium is in a binding long-term offtake agreement with BMW for the supply of 50,000 metric tonnes of battery grade lithium hydroxide from 2026 for a period of six years.
In its first year, European Lithium will supply 5,000 metric tonnes and 9,000 metric tonnes each year after.
Share price: $11.88, Down 10.47% this year
Market cap: $7.67bn
Allkem has a 75% economic interest in the Naraha lithium hydroxide plant in Japan with Toyota Tsusho Corporation (TTC) – a member of the Toyota Group.
Naraha produced its first lithium hydroxide chemical product in 2022.
An MoU was struck with PPES when Allkem was listed on the ASX under the name ‘Orocobre’ – more than 50% of forecast sales for the June 2021 quarter were expected to be allocated to long term battery grade contracts as Olaroz begun delivering product to PPES.
Share price: $5.66, Down 46.65% this year
Market cap: $808.97mn
Following the binding term sheet signed on August 2, 2021, which was conditional on the execution of a Definitive Agreement by November 20, 2021, Vulcan signed a binding lithium hydroxide offtake agreement French automaker Renault Group.
Under the latest deal, the automaker will purchase between 26,000 to 32,000t of battery grade lithium chemicals for an initial six-year period from its geothermal brine deposits in Germany from 2026.
Financial details were not disclosed.
In its deal with Stellantis, the two companies signed a binding lithium hydroxide offtake agreement starting 2026 for the supply of a minimum of 81,000t and a maximum of 99,000t of battery grade lithium hydroxide over the duration of the initial five yar agreement.
However in June 2022, the offtake was extended by five years to 2035 following an equity investment by Stellantis of A$76m – the first time an automaker had invested upstream in a listed lithium company.
Vulcan’s fifth binding offtake agreement is with German car giant, Volkswagen, for an initial five-year term with commercial delivery set for 2026.
Vulcan will supply 34,000t and maximum of 42,000t of battery grade lithium hydroxide for the duration of the deal with prices based on market prices on a take or pay basis.
Share price: 0.64, Down 38.35% this year
Market cap: $120.94mn
Element 25 signed a deal with Stellantis in January 2023 for the supply of high purity manganese sulphate (HPMSM) for a minimum of five years, with opportunities to extend.
Under the deal, Element 25 will supply up to 10,000tpa HPMSM for five years with provisions to increase volume and Stellantis will part fund development of E25’s HPSM processing facility with US$30mn investment in two tranches.
Share price: 0.10
Market cap: $60.39mn
Alliance Nickel, formerly GME Resources, signed a non-binding MoU with Stellantis in October 2022 for nickel and cobalt sulphate products from its NiWest nickel, cobalt project in Western Australia.
The MOU contemplates the finalisation of a Definitive Agreement between the two parties, discussions on the Definitive Agreement continued to advance during the December quarter.
NiWest is an advanced nickel-cobalt development project and will produce approximately 90,000 tpa (tons per annum) of battery grade nickel and cobalt sulphate for the burgeoning electric vehicle market.
To date, more than AU$30 million has been invested into drilling, metallurgical test work and development studies.
Share price: 0.50, Up 10% this year
Market cap: $1.07bn
Arafura’s deal with South Korea’s Hyundai locks in the sale of about 40% of its annual output for seven years, or up to 1,500t per year of neodymium and praseodymium oxide (NdPr) destined for use in Hyundai’s vehicles.
Supply of the element is currently anticipated to begin in 2025 subject to project financing, construction and commissioning of the Nolans project in Australia’s Northern Territory.
Share price: 0.11, Down 51.17% this year
Market cap: $192.09mn
Queensland Pacific Metals entered into a binding equity subscription agreement and offtake agreement with General Motors in October 2022 to form the beginning of a “long-term strategic collaboration.
Under the deal, GM has agreed to investment up to US$69mn (A$108mn) in equity in QPM including an initial binding commitment of US$20.1mn at A$0.18 per share.
Through this strategic collaboration, GM is granted the right to purchase all uncommitted nickel and cobalt sulphate produced in the first 15 years of Phase 1 of the TECH Project.
QPM says the agreements advance the company closer towards a final investment decision to contruct the project.
Share price: $3.94, Up 8.84% this year
Market cap: $11.96bn
Lithium producer Pilbara Minerals entered into an offtake deal with Great Wall Motor in 2017 for 75,000t of spodumene concentrate each year for an initial five-year period.
In 2019, the company entered into an additional deal with the Chinese automaker for 20,000 DMT of concentrate to be shipped for six years.
Deliveries under the deal kicked off in August 2019.
At Stockhead we tell it like it is. While Lake Resources, Arafura Rare Earths, and European Lithium are Stockhead advertisers, they did not sponsor this article.
Mining
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