Tesla Lithium Deal With Australian Miner Lapses

FILE PHOTO: Model Y cars are pictured during the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, March 22, 2022. Patrick Pleul/Pool via REUTERS

A slated deal for the sale of lithium to electric car giant Tesla from Australia’s Core Lithium has been quietly shelved.

“I want to thank Tesla for the time taken to negotiate with Core and look forward to maintaining an open and ongoing dialogue,” said CEO Gareth Manderson in an announcement (pdf) on Oct. 27.

The CEO was upbeat that the high price of lithium meant the company was “well positioned” to capitalise on international demand and current shortages of battery-grade lithium spodumene concentrate.

Meanwhile, South Australia’s Core Lithium operates the Finniss Project in the Northern Territory. Around 80 percent of the mine’s production has been allocated to Chinese lithium firms Ganfeng and Yahua.

China remains a major processor of raw lithium despite holding just 10 percent of the global supply.

Global Lithium Market Comes With Highs and Lows

Meanwhile, the prospective agreement in Tesla was supposed to be finalised on Oct. 26, 2022—according to a March announcement—but a likely factor may simply have been the high cost of lithium, which Tesla CEO Elon Musk has been critical of.

Lithium prices soared from US$17,000 per tonne in 2021 to more than US$78,000 this year at its peak.

The price volatility comes in response to the global push for net zero, with governments, companies, and major automakers scrambling to secure the supply of lithium and other critical minerals needed for a range of rechargeable batteries that will supposedly form the bedrock of decarbonised societies.

In June, Detroit auto giant Ford signed off a multi-year agreement with Western Australia-based Liontown Resources for the supply of 75,000 dry metric tons of spodumene concentrate in the first year, followed by 125,000 tons in the second year and 150,000 per annum in the remaining three years.

The deal came hot on the heels of Korea’s LG Energy Solution and Tesla, with the latter signing a five-year deal with the company for 100,000 tonnes of lithium concentrate in the first year and 150,000 tonnes in every year after.

Yet the United Nations has raised environmental concerns around critical mineral mining activities, including exposure to toxic fumes, particularly in African countries where child labour is prevalent. Further, South America, where the “lithium triangle” of nations is located, has spurred concerns around water usage (lithium mining requires plenty of water resources), especially in regions where water is scarce.