It is the third such transaction Liontown has struck after inking similar deals with Tesla and South Korean battery maker LG Energy Solution.
The deal also provides Liontown with a $300 million loan to fund the development of its lithium mine. Liontown estimates the mine will cost $545 million. It secured most of the funding from a $450 million capital raise last year.
“The signing of our third and final foundational offtake agreement is a momentous milestone for Liontown and the Kathleen Valley project, with approximately 90 per cent of Kathleen Valley’s start-up capacity now under secured long-term binding offtake agreements,” said Liontown’s managing director and chief executive, Tony Ottaviano.
“In addition to the offtake, the $300 million funding facility from Ford, together with the capital raised last year, means that we have secured commitments for the funds required to support the full commercial development of Kathleen Valley through to first production.”
Shares in Liontown rose more than 15 per cent in early trading after the announcement before paring back to be up nearly 4 per cent by mid-afternoon.
Kathleen Valley is expected to produce about 500,000 tonnes of spodumene concentrate a year, but Liontown hopes to expand to 700,000 tonnes in 2029.
Mining is expected to begin next year. Moving to reassure the market that the timetable could be met amid global supply bottlenecks, Liontown said it had placed orders for nearly three-quarters of the equipment needed for the processing plant.
Liontown’s Kathleen Valley Project will be the second major lithium mine following Wesfarmers’ Mount Holland project, which is also under construction.
Wesfarmers also struck a supply deal with Tesla, which has agreements with BHP for nickel and Mozambique-focused Syrah Resources for graphite.
Pilbara Minerals said it would spend $297.5 million to increase production capacity at its Pilgangoora project in Western Australia.
Pilbara said maximum production capacity at Pilgangoora would increase by 100,000 tonnes to 680,000 tonnes a year.
The deal will aid Ford, which is moving aggressively to capture greater market share in electric vehicles. In March, Ford said it would boost spending on EVs by two-thirds to $US50 billion through 2026 and run its EV unit separately from its legacy combustion engine business, a move aimed at competing better against Tesla.
“Ford continues working to source more deeply into the battery supply chain to meet our goals of delivering more than 2 million EVs annually for our customers by 2026,” said Ford’s vice president of EV industrialisation, Lisa Drake.
“This is one of several agreements we’re working on to help us secure raw materials to support our plan to deliver EVs for customers around the world and meet our environmental, social and governance commitments.”
While in hot demand, there is a growing debate about the global supply and demand for lithium.
Goldman Sachs made headlines when it warned that a searing rally in lithium would go into reverse this year as supply from unconventional new sources overwhelms demand. Credit Suisse Group also joined in predicting a correction. But specialists including London-based Benchmark Mineral Intelligence are loudly pushing back.
