(Reuters) – China’s Sichuan Yahua Industrial Group Co Ltd said Tuesday it has signed a deal to supply battery-grade lithium hydroxide to US electric vehicle manufacturer Tesla Inc for the next five years.
Yahua, which is located in Southwest China’s Sichuan province, has not provided tonnage figures, but in an application to the Shenzhen Stock Exchange, it estimated the total value of the contract at $ 630-880 million over the 2021-25 period.
Tesla, which began shipping the first vehicles from its gigafactory in Shanghai in December last year, already sources lithium – a key ingredient in EV batteries – from China’s Ganfeng Lithium, one of the world’s largest producers of the commodity.
Tesla did not immediately respond to a request for comment on Tuesday.
In May of this year, Yahua commissioned a 20,000-tonne-per-year lithium hydroxide plant, more than doubling its previous capacity, even as prices languished at multi-year lows amid oversupply and a drop in lithium demand as a result of the coronavirus pandemic.
Reporting by Tom Daly; additional reporting by Yilei Sun, edited by Louise Heavens