(Business Insider) – A five-year binding sales agreement between Tesla and Piedmon Lithium sent the latter’s stock up as much as 395% in Monday trades.
Piedmont will supply Tesla with a fixed amount of spodumene concentrate, a lithium mineral typically derived from pegmatite rock. Upon mutual agreement between both parties, the sales agreement could extend for a second five-year term, Piedmont said.
The move comes as Tesla looks to expand its battery capacity to help support long-term demand for its electric vehicle and energy storage business, as detailed at last week’s Battery Day event .
Piedmont owns 100% interest in a North Carolina mine that is aiming to produce-battery quality lithium hydroxide.
In response to the deal, Piedmont CEO Keith Phillips said the company will now accelerate its mine development to help support Tesla’s plans.
The agreement represents about 33% of Piedmont’s planned spodumene production of 160,000 tonnes per year, and is expected to generate between 10% to 20% of total revenues for the company.
Deliveries of the spodumene concentrate to Tesla are expected to begin between July 2022 and July 2023, “based on the development schedules of both parties,” Piedmont said.