Australia’s Core Lithium (ASX: CXO), which counts electric vehicles giant Tesla among its future costumers, is planning to send its first shipment of the key battery material by the end of the year.
The company’s flagship Finniss lithium project, near Darwin in Australia’s Northern Territory, is expected to produce 175,000 tonnes of high-quality lithium spodumene concentrate a year.
Tesla is expected to receive up to 110,000 tonnes of spodumene concentrate from Core Lithium’s mine over four years, starting before July 2023, but the final deal has not been inked yet.
The Adelaide-based company said on Tuesday that early-stage mining operations were impacted by higher rainfall and an extended wet season which resulted in a temporary increase in fuel consumption and delays to open-pit mining.
The project is now “progressing well”, Core Lithium noted, and mining had accelerated “with the arrival of the dry season and the commissioning of an additional excavator and trucks to site.”
Once online, Finniss will be the first Australian lithium-producing mine outside Western Australia.
Most of the world’s current lithium output is locked away in long term deals as downstream chemicals producers, battery makers and EV companies are frantically trying to secure future supply.
The world’s top automakers, from Tesla to Volkswagen to Toyota, have said they need an ever-growing supply of battery materials to accelerate the roll-out of EVs.
Experts expect demand for the battery metal coming from the sector to account for almost three quarters of its consumption by 2030, up from 41% in 2020.
Shortage to last
They have also warned that the world’s shortage of lithium would last for another three years at least, but with the cancellation of Rio Tinto’s Jadar project in Serbia, the shortfall would now last for several years.
Tesla also has a five-year supply deal with another Aussie miner — Liontown Resources (ASX: LTR), which will provide the EV maker with more 100,000 tonnes of lithium spodumene concentrate a year, starting in 2024.
A previous agreement with China-based Ganfeng Lithium (SHE: 002460) grants the automaker a three-year supply of battery-grade lithium, starting later this year. The EV icon also has agreements with BHP (ASX: BHP) for nickel and Mozambique-focused Syrah Resources (ASX: SYR) for graphite.