Australia’s Liontown Resources has signed a lithium supply agreement with US carmaking giant Ford on the heels of similar deals with Tesla and South Korean battery maker LG Energy Solution.
Shares in the little-known Liontown surged 17% but pared gains to trade up 5.6%, giving it a market capitalisation of about A$2.5 billion ($1.7 billion).
Liontown, a small miner chaired by Australian entrepreneur Tim Goyder, said on Wednesday it will supply Ford with 150,000 tonnes of lithium spodumene concentrate each year for five years from its flagship Kathleen Valley project in Western Australia.
The concentrate is a source of lithium essential for making EV batteries.
A global push towards decarbonisation and achieving net zero carbon emissions has bolstered the demand for EVs, propelling the prices of battery metals like lithium to record levels.
Ford Taking on Tesla
Ford, which is betting aggressively on EVs, said in March it would boost spending on EVs by two-thirds to $50 billion through 2026 and run its EV unit separately from its legacy combustion engine business, a move aimed at competing better against Tesla.
The US car maker has a joint venture with EV battery maker SK On, a unit of South Korea’s SK Innovation. The venture, called BlueOvalSK, is slated to have an annual battery production capacity of 129 gigawatt-hours (GWh).
Liontown said it has also secured a debt facility of A$300 million from a Ford unit to further develop the Kathleen Valley lithium project.
The Australian miner is expected to start supplying lithium-bearing spodumene in 2024, starting with 75,000 tonnes in the first year of the deal, and rising to 150,000 dry metric tonnes (DMT) in the third year.
“With high-calibre foundational offtake agreements now in place with Ford, Tesla and LG Energy Solution, and financing commitments secured … the Liontown board has made the final investment decision to proceed to develop Kathleen Valley,” the company said in a stock exchange filing on Wednesday.
“In preparation for project delivery, the company intends to award a series of major contracts (including engineering, procurement and construction management, power purchase agreement, freight logistics, bulk earthworks and open cut mining services) to established and high quality contractors.”
- Reuters, with additional editing by George Russell