Trafigura secures access to lithium from EnergyX

Commodity trader Trafigura has signed a binding 10-year purchase agreement with EnergyX for 100,000 tons of battery-grade lithium products from its projects in the U.S. and Chile. A large portion of this lithium is intended to be supplied to battery manufacturers in the U.S.

EnergyX’s Lithium Project in Chile

Image: EnergyX

Through the agreement with EnergyX, Trafigura secures access to lithium of battery quality once again, following its signing in March of a binding purchase agreement with Smackover Lithium for the supply of lithium carbonate of battery quality from the South West Arkansas Project. This involves a volume of 80,000 tons over ten years.

The deal with EnergyX is now on a similar scale: Here, Trafigura secures 100,000 tons of lithium products over ten years, though in this case they come from two projects. Specifically, Trafigura will purchase lithium carbonate from EnergyX’s Black Giant project in Antofagasta, Chile, and lithium hydroxide from the Lonestar project in Texas, USA. Lithium carbonate is typically used as a precursor for LFP cathodes, while lithium hydroxide is more commonly used for NMC and NCA cathodes.

Trafigura has committed to purchasing 66 percent of the output volume in the first phase of Black Giant and 30 percent of the output volume in the first phase of Lonestar. The company states that it plans to supply a significant portion of these quantities to the U.S. battery industry.

The lithium procurement deal is worth around $2 billion.

According to EnergyX, the deal is worth over two billion US dollars based on current lithium market prices. It remains unclear, however, whether Trafigura will actually pay daily market prices or if a fixed price structure was agreed upon. Both companies remain silent on this matter.

"Purchase agreements are among the most crucial steps in taking a lithium project from development to production," said Teague Egan, founder and CEO of EnergyX. "A long-term purchase commitment from a partner of Trafigura’s size and creditworthiness shows that the market has demand for EnergyX’s product. It also provides lenders and investors with the necessary sales forecast before they commit capital to building production facilities."

Strengthening the US battery supply chain

Daniel von Arx, head of the Battery Metals division at Trafigura, added: “We are pleased to support EnergyX in developing its lithium projects in Chile and the United States. Long-term supply agreements are a crucial step in moving projects into production phase. This agreement underscores our ability to implement strategic projects in the area of critical minerals and build secure, diversified supply chains. With our logistics network and market expertise, we look forward to supplying our customers with these battery-grade lithium products and thereby strengthening the supply chains of the U.S. automotive and energy storage industries.”