Australian lithium miners were awarded Tesla's purchase of a large single flagship project, and the output of 1x3 years was booked.

Australian lithium miner Liontown Resources Ltd said in a statement on Wednesday that it had signed a five-year legally binding sales and procurement agreement with electric car maker Tesla.

According to the statement, Tesla will buy 100000 dry tons (DMT, 's weight after moisture) of spodumene concentrate from Liontown in the first year of the agreement (2024), which will increase to 150000 dry tons per year in subsequent years.

The spodumene concentrate supplied to Tesla will come from its A $473 million flagship Kathleen Valley lithium mine project in western Australia, which is expected to begin commercial production by 2025, Liontown said in a statement.

(source: Liontown official website)

Previously, Liontown signed an agreement with (LGES), the LG energy solution, for the same amount of purchase. This means that if Tesla and Liontown reach a final agreement, Tesla and LGES will each contract for the production of 1Universe 3 before the start of the Kathleen Valley project.

The negotiations must be completed by the end of May

The agreement also says that the pricing of lithium concentrates sold by Liontown will refer to the market price of lithium hydroxide monohydrate. In the past few years, lithium prices have soared, about eight times higher than in early 2021, as carmakers shift towards electrification.

However, the agreement points out that the two sides must also complete the negotiations and implement a detailed final agreement by May 30, 2022, otherwise the preliminary agreement will be terminated.

Liontown said Tesla's "first echelon" of companies in the lower reaches of its value chain was in line with its off-take strategy and would negotiate with other potential and customers over the remaining production.

Liontown's shares listed on the Australian stock exchange jumped nearly 15 per cent on the news.