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Tesla Signs 3-Year Lithium Deal with Chinese Supplier

China’s largest producer of lithium has signed a renewable 3-year deal to supply the metal as lithium hydroxide for use in batteries made by Tesla Inc.
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China’s largest producer of lithium has signed a renewable 3-year deal to supply the metal as lithium hydroxide for use in batteries made by Tesla Inc.

The agreement, which will begin next year, calls for Jiangxi Ganfeng Lithium Co. Ltd. to provide Tesla with about 20% of the carmaker’s projected needs through 2020. The arrangement could then be extended for another three years.

Depending on how many electric cars Tesla makes, the company could require as much as 28,000 tons of lithium hydrogen by 2020, according to Bloomberg News, which cites an estimate by Benchmark Mineral Intelligence.

Tesla’s deal with Ganfeng follows a separate lithium supply deal the American company struck earlier this year with Australian supplier Kidman Resources Ltd.

Lithium prices have been surging because of the auto industry’s aggressive electrification plans. But Bloomberg notes that prices have been softening this year on predictions by some forecasters that new mining projects may soon outstrip demand.

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