Liontown Resources (LTR.AX) announced on Wednesday that it had signed a five-year agreement to supply lithium spodumene concentrate to Tesla (TSLA.O).
After the announcement, lithium miner’s shares went up nearly 20% after the announcement.
The Elon Musk-owned company plans to purchase 100,000 dry metric tons (DMT) of concentrated fuel from Liontown in the first year starting in 2024 and 150,000 DMT per year thereafter, Reuters reported.
Liontown Resources Limited is a company that explores and develops battery metals in Australia.
The company has discovered a Tier-1 lithium-tantalum deposit in Western Australia at its Kathleen Valley Lithium-Tantalum Project.
Buldania Project, Moora Gold-PGE-Ni-Cu Project, and Toolebuc Vanadium Project are some of its other projects.
Lithium prices have skyrocketed over the past few years as automakers move towards electric vehicles, driving up demand from suppliers. Compared to the start of 2021, the prices are about eight times higher.
Read More: The first woman to be reported to have been cured of HIV following a stem cell transplant
Lithium will be supplied by Liontown’s Kathleen Valley Lithium project in Western Australia, which is expected to start commercial production in 2025.
Around a third of the annual production capacity of the project will go to Tesla.
Lithium supply from the Liontown project has already been arranged with LG Chem (051910.KS), a battery manufacturer in South Korea.
Liontown’s shares rose 19.8% to A$1.665, their largest intraday jump since Sept. 13, 2021.
($1 = 1.3986 Australian dollars)