The operator of the Northern Territory's newest mine has signed a contract to supply lithium to major electric vehicle manufacturer Tesla, causing a jump in the miner's share price.
Core Lithium started construction on its lithium mine, around 80 kilometres south-west of Darwin, in October 2021, and aims to produce its first lithium in the final quarter of 2022.
The company has signed an agreement with Tesla to supply 110,000 tonnes of lithium concentrate over four years.
Lithium is a crucial component in batteries used in Tesla's electric vehicles and home batteries.
In February, the median price for lithium concentrate was $US3,250 per tonne, according to commodity analysts Fastmarkets.
Tesla has also agreed to support Core Lithium's further expansion of its Finniss project and development of lithium chemical processing capacity.
Core Lithium managing director Stephen Biggins said the supply agreement with Tesla represented about 20 to 25 per cent of the mine's expected production over the four years.
"Core is really excited to sign this lithium supply agreement with Tesla, which links Core and the Northern Territory to the world's highest-value and leading electric car manufacturer," Mr Biggins said.
"The demand for lithium is growing rapidly and that's where Core and the Northern Territory has a key role to play, which is enabling the globe to move towards a significant reduction of emissions by using electric vehicles.
"And enabling the growth and use of renewable energy storage by providing enough lithium for the globe to produce batteries for renewable energy storage."
Core Lithium's share price jumped 15 per cent on the ASX after the Tesla agreement was announced on Wednesday.
Drive for renewables boosts lithium demand
Mr Biggins said demand for lithium had increased significantly over the past 12 months.
"We've been developing relationships throughout the electric vehicle and lithium battery supply chain over a number of years," he said.
"But certainly the dynamic has changed over the past 12 months, as the rest of the world and the industry recognises that the world needs to have enough lithium supply to meet its targets to reduce emissions through electrification of the world's electric vehicle fleet."
Core Lithium has several other supply agreements, including the largest lithium producer in the world Ganfeng Lithium.
