Tesla Secures Lithium Supply From Core Lithium Via Binding Term Sheet

Tesla Inc (NASDAQ: TSLA) continues to secure its supply chain by going straight to raw material producers. It was announced late last night that the electric vehicle company has entered into a binding term sheet for the purchase of lithium spodumene concentrate with that of Core Lithium (ASX: CXO).

The current term sheet proposed that Core will supply the firm with up to 110,000 tonnes of Li2O spodumene concentrate, which is to be delivered over a period of four years. Pricing is to be based on the current market price for spodumene concentrate, however the arrangement is subject to both floor and ceiling pricing that was undisclosed.

Concentrate is set to come from the firms Finniss Lithium Project, which has recently been subject to a Final investment Decision by the company. The mine is currently under construction, and is expected to begin production in the fourth quarter of this year. Product delivery to Tesla is currently anticipated to begin in the second half of 2023 as a result.

As part of the binding agreement, Tesla has also agreed to provide support for a stage 3 expansion of the project. The expansion relates to the development of downstream lithium chemical processing, which Tesla has also shown interest in. Details here however were limited.

The binding term sheet is subject to a definitive agreement being met by August 27, 2022.

The binding term sheet follows the news that Sichuan Yahua Industrual Group, a major investor in core and an offtake partner, had entered into an agreement to supply Tesla with lithium hydroxide over a period of three years. The lithium being produced for the Tesla under that agreement is set to come from Core Lithium’s Finniss property as well, via a 3 year, 75,000 tonne per annum offtake arrangement.

Tesla last traded at $864.37 on the Nasdaq.

Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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