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Sichuan Yahua Industrial Group.

Tesla secures five-year supply of lithium in deal with China’s Yahua

Mon, 01/04/2021 - 11:01 -- paul Crompton

US electric vehicle (EV) maker Tesla has signed a five-year deal to receive battery-grade lithium hydroxide from China’s Sichuan Yahua Industrial Group. 

The total value of the contract, signed by Yahua's wholly-owned subsidiary Yaan Lithium, is $630-$880 million and lasts up to 2025, according to news outlet Reuters, which quoted a filing by the Shenzhen Stock Exchange.

The cost value translated into a total lithium hydroxide procurement amount of 63,000-88,000 tonnes, or 12,600-17,600 tonnes per annum, according to analysts at Daiwa Capital Markets.

Last May, Yahua commissioned a 20,000 tonnes per year lithium hydroxide plant in Yaan city into operation, more than doubling its previous capacity.

It already sources lithium - an ingredient in EV batteries - from China’s Ganfeng Lithium, one of the world’s top lithium producers.

In 2018, Tesla signed a deal to receive a fifth of China's largest lithium compounds producer, Jiangxi Ganfeng Lithium’s production. Under the terms of the agreement, Tesla also designated its battery suppliers to buy lithium-hydroxide products from Ganfeng.

In 2019, Ganfeng Lithium finalised a $160 million investment deal to raise its stake in Argentina’s Cauchari-Olaroz lithium brine project to 50%. Ganfeng Lithium now partners with Canada’s Lithium Americas in a 50-50 joint venture that will develop and operate the project.

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