Elon Musk-led Tesla's Lithium Supply Talks Collapse With Australian Miner Core

Tesla Inc.’s efforts to agree a lithium supply pact with Australian miner Core Lithium Ltd. fell through after months of negotiations against a backdrop of rocketing prices.

Elon Musk led Tesla failed in reaching a lithium supply pact agreement with Australian miner Core Lithium Ltd. (AFP)

(Bloomberg) -- Tesla Inc.'s efforts to agree a lithium supply pact with Australian miner Core Lithium Ltd. fell through after months of negotiations against a backdrop of rocketing prices.

A deadline for concluding the terms of a four-year deal passed on Wednesday without any agreement, the Adelaide-based miner said Thursday in a statement. No reason was given for the failure to clinch a pact.

Core said in March it was working on a deal with Tesla for the supply of up to 110,000 tons of spodumene concentrate, with terms referenced to market prices for the lithium-bearing raw material. Since then spodumene prices have soared, and more than doubled since the end of February, according to Benchmark Mineral Intelligence.

Tesla is facing increasing competition for battery metals as rival automakers expand their electric lineups, and as tight markets put more negotiating power in the hands of producers and project developers. Miners are now in a stronger position to demand higher prices, or to ask customers to consider joint-ventures or to offer funding to develop their assets.

Core's shares fell 5.2% in Sydney trading, the most in almost a month.

The miner, which in August had extended negotiations with Tesla, has other agreements in place for about 80% of production for the first four years of its Finniss mine project in Australia's Northern Territory. The failure to strike a further pact deal should allow the company to benefit more from higher prices, according to Chief Executive Officer Gareth Manderson.

Recent small-scale sales of raw materials and “an increasing lithium price environment indicate that Core Lithium is well positioned to capitalize on the high demand and current shortage of available battery grade lithium spodumene concentrate,” Manderson said in the statement.

Elon Musk, who recently complained lithium is “crazy expensive”, this month confirmed the company is building a refinery in Texas, meaning the company is likely to require additional supplies of raw materials. The firm has existing supply pacts with lithium producers including Albemarle Corp., Livent Corp. and Ganfeng Lithium Co.

Prices of lithium carbonate, a refined material, have reached a fresh record at 562,500 yuan ($78,376) a ton in China and doubled since the start of the year.