Posted on 03 Aug 2023
Major Chinese lithium salts producer Sichuan Yahua Industrial has extended the duration of its lithium hydroxide supplies to US electric vehicle producer Tesla to 2030 from 2025.
The two firms have agreed to renew their supply contract from 1 August 2023 to 31 December 2030, during which Yahua will supply a total of 207,000-301,000 t of battery-grade lithium hydroxide to Tesla.
"The supply volume in each year during this period as well as the supply prices shall be determined by mutual agreement," Yahua said, but did not disclose further.
Yahua signed a supply agreement with Tesla in December 2020 for lithium hydroxide purchases with a value of $630mn-880mn over 2021-2025. Yahua currently has a total capacity of 73,000 t/yr for lithium salts in southwest China's Sichuan province, including lithium carbonate and hydroxide, with a target to more than double its lithium salts output capacity to 173,000 t/yr by the end of 2025.
It has also signed a supply agreement with South Korea's SK New Energy (Shanghai) for 20,000-30,000t of battery-grade lithium hydroxide from its wholly-owned subsidiary Yahua (Ya'an) during 2023-25. South Korea's LG Energy Solution will also purchase no more than 30,000t from Yahua (Ya'an) over 2023-25.
Tesla increased its global EV production by 86pc to 479,700 units in the second quarter of this year, following greater production capacity and a ramp-up at multiple facilities. Its Shanghai EV gigafactory has operated at its full 750,000 units/yr capacity in the last few months. It has also started building an in-house lithium refinery in Corpus Christi, Texas, to supply EV battery-grade lithium to around 1mn EVs.
Lithium hydroxide and carbonate are the two key lithium salts feedstocks used in the production of EV power batteries, with the hydroxide mainly used to make ternary battery cathode active materials and the carbonate mainly for lithium iron phosphate.
Lithium hydroxide prices hit record highs of 556,000-571,000 yuan/t ex-works in November last year driven by surging demand from the EV segment, but softened since following destocking activities from battery producers and China's cancellation of its government subsidies for EV sales. Argus last assessed prices for 56.5pc grade hydroxide lower at Yn250,000-275,000/t ex-works on 1 August from Yn255,000-280,000/t ex-works on 27 July.
Source:Argus Media
