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Blog Tesla Secures New Lithium Supply Deal

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Tesla’s battery supply is getting a bump from a new five-year partnership with China’s Sichuan Yahua Industrial Group Co.

Sichuan Yahua, a wholly-owned subsidiary Yaan Lithium, announced the deal Tuesday. Reuters reported a Shenzhen Stock Exchange filing that showed the company put the total value of the contract at $630-$880 million over 2021-25.

Tesla started production at Giga Shanghai about a year ago. The company is ramping up production of the Model 3 and Model Y at Giga Shanghai, eventually scaling to 500,000. As Tesla’s production numbers rise, so does the need for lithium, an important ingredient in Tesla’s battery design.

Tesla is reportedly looking for suppliers around the world and will likely start facing more competition for lithium supply, as more automakers begin to electrify their fleets.

Sichuan Yahua is a partner in the midst of growth. The company doubled its lithium hydroxide plant’s capacity to 20,000 tons per year in 2020.  

 
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A few years ago, the Li miners ramped up production based on car maker ev announcements but only Tesla and some Chinese makers produced in volume and the price of Li and (miner stocks) plummeted. So as Li demand finally picks up, prices will firm but new production will come back on line. Supply and demand. Also there is plenty of Li on earth, just a matter of ramping mining capacity.
 
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A few years ago, the Li miners ramped up production based on car maker ev announcements but only Tesla and some Chinese makers produced in volume and the price of Li and (miner stocks) plummeted. So as Li demand finally picks up, prices will firm but new production will come back on line. Supply and demand. Also there is plenty of Li on earth, just a matter of ramping mining capacity.
I see Li much the same.

One small point, that battery day talked about was the processing of Li. Seems a lot of time & money can be gained improving processing of Lithium for battery use. About 40% of Li goes to batteries in 2020. Internet search on Lithium uses informative. Current methods of Li production were developed for the other 60% share of Li uses.
 
I haven't been active in this Tesla group.

Re the lithium from Yahua. I have stock in Core Lithium in Australia who have a 100% offtake with Yahua. Their spudumene is of high quality and I have a mate who is drilling for Core outside of Darwin and are producing exceptional results. It may be the reason our stock has doubled recently.
 
I don't understand why Australia didn't start Lithium battery production. I think they have all the raw materials. Is it just "to much chemistry needed". And much simpler to just do extraction?
Demand was just too small for such a complex product and no local industries.

Japan - Sony needed for electronics industry.

Staying with extraction probably does make the most sense for Australia. Making the best Li compounds to offer to different industries worth considering. I think Li Al alloy is exported from Australia? And I have no idea what Li compound the Aluminium producers use. (random thoughts I should be sleeping)