With battery costs increasing for the first time in years in 2022, in part on the back of higher raw materials prices, it is clear why electric vehicle (EV) makers continue to look for ways to secure supply of key metals such as lithium.
Demand for EVs is expected to remain high in coming years as the world moves away from fossil fuels to greener sources of energy, which in turn means electrifying transportation. Organizations such as the US government and the EU have pledged to phase out internal combustion engine cars, while carmakers have set ambitious targets to electrify their fleets.
For car manufacturers from Tesla (NASDAQ:TSLA) to General Motors (NYSE:GM), the past few years have seen the race to secure a steady supply of lithium increase — much more so in the past year, as prices climbed and geopolitical tensions exposed the vulnerabilities of the global lithium supply chain.
Current lithium producers have already committed to contracts with battery manufacturers and carmakers, but which juniors have inked deals for supply yet to come on stream? Read on to find out.
1. Liontown Resources (ASX:LTR)
Market cap: US$3.97 billion; current share price: AU$2.75
Liontown Resources bills itself as a future Australian lithium producer, with two lithium projects in Western Australia, including its flagship Kathleen Valley project. Expected to come online in 2024, the project will produce an estimated 500,000 MT of 6 percent lithium oxide concentrate per year.
Last year was busy for Liontown, which in February inked a deal with US EV maker pioneer Tesla. The deal is for an initial five year period starting in 2024 and accounts for about one-third of Kathleen Valley’s start-up production capacity; the arrangement is conditional on Liontown starting commercial production by 2025.
In June 2022, Liontown signed another five year offtake agreement with carmaker Ford (NYSE:F) for the supply of up to 150,000 dry metric tons (dmt) from the Western Australia project. In addition, the companies executed a AU$300 million funding facility agreement for the project’s development.
Aside from Tesla and Ford, Liontown also has an offtake agreement with South Korea’s LG Energy Solution (KRX:373220). Adding up all of these deals represent commitments of up to 450,000 dry metric tons per year, or approximately 90 percent of Kathleen Valley’s startup spodumene production capacity.
2. Lithium Americas (NYSE:LAC)
Market cap: US$3.11 billion; current share price: US$19.48
Dual-listed Lithium Americas inked a massive lithium supply deal with General Motors at the end of January 2023 to develop the Thacker Pass mine in Nevada. Under the agreement, the Detroit-based carmaker will make a US$650 million equity investment in Lithium Americas, which represents the largest investment ever by an automaker to produce battery raw materials.
Lithium Americas owns 100 percent of the Thacker Pass lithium claystone project in the US, which is projected to begin production in the second half of 2026. With a mine life of 40 years, the project will have an annual production capacity of 80,000 metric tons (MT) per year. According to estimates from the company, the lithium extracted and processed from the project will be able to support the production of up to 1 million EVs on an annual basis.
In addition to Thacker Pass, Lithium Americas is developing the Caucharí-Olaroz project in Jujuy, Argentina, together with Chinese top lithium producer Ganfeng Lithium (OTC Pink:GNENF,HKEX:SZSE:002460). Lithium Americas also owns the Pastos Grandes lithium brine project in Salta, Argentina.
3. Piedmont Lithium (ASX:PLL)
Market cap: US$1.05 billion; current share price: AU$0.82
ASX-listed Piedmont Lithium kicked off 2023 on a bright note when it amended its lithium supply deal with Tesla on January 3. The lithium company is now set to supply the US automaker with spodumene concentrate from the past-producing North American Lithium operation — a project Piedmont is developing together with Sayona Mining (ASX:SYA). Under the amended deal, the company has agreed to deliver approximately 125,000 MT of spodumene concentrate to Tesla starting in the second half of 2023 through to the end of 2025.
North American Lithium, which is located in Quebec, is not the only project Piedmont Lithium is developing in North America. With a goal of becoming one of the largest lithium hydroxide producers in the region, the company is also moving forward at its Carolina Lithium project and Tennessee Lithium production facility. In Ghana, it has a partnership with Atlantic Lithium (ASX:A11,LSE:ALL), which is developing the Ewoyaa lithium project.
4. Vulcan Energy Resources (ASX:VUL)
Market cap: US$499.05 million; current share price: AU$4.52
Europe-focused Vulcan Energy Resources says its combined geothermal energy and lithium resource is the largest in the region, with license areas in Germany’s Upper Rhine Valley and in Italy. The company touts its lithium project as being a zero-carbon asset.
Netherlands-based Stellantis (NYSE:STLA), which was created from the merger of Fiat Chrysler and France’s Peugeot, bought an 8 percent stake in Vulcan in 2022, extending its initial lithium supply agreement that was signed at the end of 2021. The carmaker has also recently expanded its partnership with the lithium company to develop geothermal energy projects in Germany.
Starting in 2026, Vulcan is also set to deliver lithium for an initial six-year term to Renault (EPA:RNO), which is expected to purchase between 26,000 and 32,000 MT of battery-grade lithium chemicals during the binding offtake deal.
In 2022, Vulcan also signed a binding offtake deal with Volkswagen (FRA:VOW) for between 34,000 and 42,000 MT of battery grade lithium hydroxide over the duration of the lithium supply deal.
Aside from signing supply deals with automakers, Vulcan has inked agreements with battery materials maker Umicore (EBR:UMI) and South Korea’s LG Energy Solutions.
5. Ioneer (ASX:INR)
Market cap: US$410.893 million; current share price: AU$0.30
Ioneer wholly owns the Rhyolite Ridge lithium-boron project in Nevada, US — according to the company, the asset is the only known lithium-boron deposit in North America, and one of only two such known deposits in the world. Rhyolite Ridge is expected to have an annual capacity of 20,600 MT of lithium carbonate and nearly 174,400 MT of boric acid.
In January, the company received a US$700 million loan from the US Energy Department to build its mining project in Nevada. Rhyolite Ridge is estimated to produce enough lithium to build 370,000 EVs each year.
Ioneer has a binding offtake agreement with Ford to supply 7,000 MT of lithium carbonate annually for five years to BlueOvalSK, the carmaker’s battery joint venture with SK Innovation, which will begin by the end of 2025.
The junior lithium company has also inked a deal with Toyota (OTC Pink:TOYOF,TSE:7203) and Panasonic’s (OTC Pink:PCRFF,TSE:6752) joint venture — Prime Planet Energy & Solutions — for the supply of 4,000 MT of lithium carbonate per year for five years.
6. Rock Tech Lithium (TSXV:RCK)
Market cap: US$147.41 million; current share price: C$2.00
Rock Tech Lithium’s approach includes the production of sustainably sourced spodumene feedstock from its Ontario-based Georgia Lake project, as well as the construction of lithium hydroxide converters in Europe. In the years to come, the company expects to source raw material from recycling discarded batteries, pledging to have 50 percent of its feedstock at its German convertors come from recycled lithium by 2030.
In October 2022, the company signed a lithium supply deal with German carmaker Mercedes-Benz (OTC Pink:MBGAF,ETR:MBG). It is set to start in 2026, and would see Rock Tech supply an average of 10,000 MT of battery-grade lithium hydroxide per year over a five year term.
7. European Lithium (ASX:EUR)
Market cap: US$75.85 million; current share price: AU$0.08
European Lithium’s fully licensed Wolfsberg hard-rock lithium deposit in Austria is expected to start production in 2025. According to a March 2023 definitive feasibility study, the asset would have an average production rate of 780,000 MT per year, peaking at 840,000 MT, over a 14.6 year life of mine.
The ASX-listed company is aiming to be the first and largest local supplier of lithium hydroxide in the region and holds a non-binding memorandum of understanding with BMW (OTC Pink:BMWYY,ETR:BMW). If a deal goes through, the German carmaker would make an upfront payment of US$15 million for future supply of lithium hydroxide from Wolfsberg.
The company made headlines in October 2022, when it said its subsidiary European Lithium AT would merge with Sizzle Acquisition, a special purpose acquisition company, to create US-listed company Critical Metals. Critical Metals will own Wolfsberg and European Lithium will be the biggest shareholder in this new firm. The resultant company is expected to go public on the NASDAQ after the transaction closes.
8. Greenwing Resources (ASX:GW1)
Market cap: US$22.88 million; current share price: AU$0.20
Australia-based Greenwing Resources is a critical minerals explorer and developer that has lithium and graphite projects spread across Madagascar and Argentina.
In September 2022, the lithium junior struck a deal with Chinese electric carmaker NIO (NYSE:NIO,HKEX:9866), which agreed to pay AU$12 million to become Greenwing’s largest shareholder. The strategic investment is expected to help with the development of Greenwing’s San Jorge lithium project in Catamarca province, Argentina, and aligns NIO as the company’s potential joint venture and offtake partner.
All stocks data was accurate as of August 1, 2023. The companies listed are ordered by market cap.
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
