telsa (TSLA) amended its supply agreement with Piedmont lithium (PLL) on Tuesday. The new deal secures the electric vehicle maker’s lithium supplies for the next three years. PLL shares rose Tuesday premarket after the news. But Tesla stock fell after Monday’s fourth-quarter delivery report.
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North Carolina-based Piedmont will supply Tesla with 125,000 tonnes of spodumene concentrate, or SC6, from its North American lithium mining operation in Quebec. Deliveries will begin in the second half of 2023 and continue through 2025, the company said. The three-year contract includes an option to extend for a further three years.
Under the terms, SC6 pricing will be determined by a formula based on average lithium hydroxide monohydrate market prices at the time of each shipment to Tesla during the agreement.
North American Lithium, formerly known as the Quebec Lithium Mine, is an open pit and SP6 operation 25% owned by Piedmont and 75% owned by Australia’s Sayona Mining. Sayona Mining will source the SC6 and Piedmont has agreed to purchase 113,000 tonnes per year or 50% of total production. Piedmont expects the first commercial deliveries to Tesla to begin in the third quarter of 2023.
“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,” said Piedmont Lithium CEO Keith Phillips in the press release.
Tesla, Piedmont’s previous deal
Piedmont initially entered into a sales deal with Tesla in September 2020. This five-year contract guaranteed 160,000 tonnes of SC6 annually from Piedmont’s deposit in North Carolina and was expected to generate 10% to 20% of the company’s overall sales.
PLL stock rose nearly 8% premarket before rebounding Tuesday morning following the announcement. Piedmont Lithium shares are down about 22% over the past three months and more than 50% off their March 2021 peak.
Meanwhile, TSLA shares fell more than 4% premarket Monday following its fourth-quarter delivery report. The EV giant set a delivery record in the fourth quarter but still missed lowered analyst forecasts.
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