The two first signed a deal in mid-February and had until today to finalise the operational and logistical terms.
Tesla will buy 100,000 dry metric tonnes of spodumene in the first year of the five-year deal, expected to be 2024, rising to 150,000tpa thereafter.
Pricing will be determined using a formula-based mechanism referencing market prices for battery-grade lithium hydroxide monohydrate.
The deal represents about a third of Liontown’s start-up capacity at Kathleen Valley of about 500,000tpa.
Liontown also has an offtake deal with LG Energy Solutions for 150,000tpa.
About 60% of Liontown’s planned production is covered by long-term agreements with the company in discussions with a potential third customer.
If finalised, it is expected 85% of Kathleen Valley’s production will be committed, with the rest to be sold on the spot market.
Liontown managing director Tony Ottaviano said concluding the agreement with global innovator Tesla was a tremendous achievement.
“This means that we now have two of the premier companies in the global lithium-ion battery and EV space signed up as foundational customers, marking a significant step towards realising our ambition to become a globally significant provider of battery materials for the clean energy market,” he said.
Liontown is aiming to make a final investment decision this month.
Once at full production, Kathleen Valley is expected to represent 5.7% of the world lithium market and 4% of the market on a lithium carbonate equivalent (LCE) basis.
Kathleen Valley has a post-tax net present value of $4.2 billion, an internal rate of return of 57% and payback period of 2.3 years.
Life-of-mine free cashflow is forecast at $12.2 billion.
A $66 million expansion to get to 4Mtpa is planned for year six of the operation, increasing output to 700,000tpa of spodumene, as well as up to 587t of tantalum.
