Liontown Resources Limited have announced that it has executed a binding offtake agreement and funding facility with leading global automaker Ford Motor Company. This is for the supply of up to 150,000 dry metric tonnes (DMT) of spodumene concentrate, a source of lithium essential for use in electric vehicle (EV) batteries, per annum.
The spodumene concentrate will come from Liontown’s Kathleen Valley Lithium Project in Western Australia for five years. The agreement represents Liontown’s third and final foundational offtake required to underpin the development of Kathleen Valley.
This marks the culmination of the disciplined execution of its offtake strategy. Together with the previously announced binding full-form offtake agreements with Tesla and LG Energy Solution, Liontown’s total offtake commitments now stand at up to 450,000 DMT per annum of spodumene concentrate.
This represents approximately 90 percent of Kathleen Valley’s startup production capacity. The remaining production from Kathleen Valley is intended to be retained for spot volume sales and/or discrete offtake agreements.
Liontown’s supply to Ford is expected to commence in 2024, with volumes of 75,000 DMT of spodumene concentrate in year one of operations. This will increase to 125,000 DMT in year two and 150,000 DMT for years three to five of the initial five-year term.
The commercial terms of the Offtake Agreement reflect the continued strength in demand for spodumene concentrate and were not subsidised by the Funding Facility.
Under a separate Funding Facility, a Ford subsidiary will provide a AUD $300 million debt facility to Liontown. The proceeds will be used towards partially funding the development costs of Kathleen Valley.
The Funding Facility, together with the AUD $463 million raised by Liontown in December 2021, means that Liontown have now secured commitments for the required funds to support the full development of the project through to the first production.
Tony Ottaviano, Liontown CEO, said: “The signing of our third and final foundational offtake agreement is a momentous milestone for Liontown and the Kathleen Valley project, with approximately 90 percent of Kathleen Valley’s start-up capacity now under secured long-term binding offtake agreements.
“Our disciplined approach to our offtake strategy has enabled us to build a customer base of Tier-1, globally significant customers in the EV battery supply chain, validating Kathleen Valley’s status as a globally relevant lithium asset.
“In addition to the offtake, the AUD $300 million funding facility from Ford, together with the capital raised last year, means that we have secured commitments for the funds required to support the full commercial development of Kathleen Valley through to first production.”
Lisa Drake, Ford’s vice president of EV Industrialisation, said: “Ford continues working to source more deeply into the battery supply chain to meet our goals of delivering more than two million EVs annually for our customers by 2026.
“This is one of several agreements we’re working on to help us secure raw materials to support our plan to deliver EVs for customers around the world and meet our environmental, social and governance commitments.”