Tesla, Yahua ink three-year lithium carbonate supply deal

China’s Yahua Industrial Group has secured a new order from Tesla for its supply of lithium carbonate, a key raw material for the production of electric vehicle batteries.

Under the purchase agreement dated June 19, Yahua — through its subsidiary Yahua Lithium Ya’an — will supply an unspecified amount of lithium carbonate to Tesla between 2025 and 2027. There is also an option to extend by another year.

The price of lithium carbonate will be determined in accordance with the method agreed upon by the two parties, the agreement reads.

Currently, there is an existing contract signed for Yahua to supply 63,000 to 88,000 tonnes of lithium hydroxide to Tesla from 2021-2025, with a total value of $880 million. In August of last year, the parties extended the contract by 7.5 years for a larger supply of 207,000 to 301,000 tonnes.

By the end of 2023, Yahua had already provided 5.8 billion yuan ($799 million) of lithium products to the US carmaker, according to the group’s annual trading report.

The Sichuan-based Yahua, which mainly manufactures and sells industrial explosives, is heavily involved in the EV battery space and is one of the first in China to produce lithium hydroxide. It currently has established partnerships with Contemporary Amperex Technology Ltd., the largest battery maker in the world, as well as South Korea’s LG and SK On.

The group also has investments in multiple lithium mining projects around the globe, led by the Kamativi mine in Zimbabwe, which has already begun outputting the battery material and is expected to reach full production this year.

It also has offtake agreements with lithium miners including Vancouver-based Sigma and Australia’s Pilbara Minerals.