In one of the biggest agreements ever linked to direct lithium extraction technologies, lithium startup EnergyX announced on Monday that it has signed a $2 billion binding offtake to deliver battery metal from Chile and the US to commodities trader Trafigura.
Strong demand for lithium from the rapidly expanding stationary battery storage system sector has compensated inconsistent sales in the global electric car market, which had been the main user of the lightweight metal for years, according to the 10-year agreement.
As part of a take-or-pay agreement, Trafigura has agreed to purchase 100,000 metric tons of lithium from EnergyX over a ten-year term.
The present price of lithium, which is close to $20,000 per metric ton, determines the deal’s value.
According to Daniel von Arx, head of battery metals at Trafigura, “This agreement reflects our ability to help bring strategic critical minerals projects online and build secure, diversified supply chains.”
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As per the deal, Trafigura will purchase from EnergyX 5,000 metric tons of lithium hydroxide and the equivalent quantity of lithium carbonate annually.
Depending on the gadget the battery is powering, battery manufacturers usually favor one variant over the other.
Founded in 2018 and supported by General Motors and the Italian energy corporation Eni, EnergyX plans to begin producing lithium in 2028.
TRAFIGURA AIMS FOR THE LONG-TERM US MARKET
Starting in 2029, the company intends to generate 15,000 metric tons of lithium hydroxide annually in Texas; Trafigura will purchase 33% of that production.
In 2028, EnergyX intends to begin manufacturing 7,500 metric tons of lithium carbonate annually in Chile, with Trafigura accounting for 66% of the country’s output.
With a long-term objective of becoming a major supplier to US markets once the nation’s battery supply chain is established, Switzerland-based Trafigura intends to first sell the lithium to Chinese consumers.
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EnergyX specializes in Direct Lithium Extraction (DLE), a filtration method akin to home water softening.
Major competitors like ExxonMobil, Vulcan Energy Resources, and Lilac Solutions are also developing DLE technologies.
EnergyX’s new deal advances its $690 million U.S. Export-Import Bank loan application while shifting immediate focus away from a public listing.
Founder and CEO Teague Egan stated that commercial production must come before an IPO, adding that he expects long-term lithium demand to eventually outpace supply despite recent market volatility.
EnergyX CEO Teague Egan maintains full confidence in lithium’s underlying strength, noting that steady year-over-year growth in global demand will persist regardless of short-term market fluctuations.
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