The Core Lithium Ltd (ASX: CXO) share price is having a difficult morning.
In early trade, the lithium miner's shares were down 10% to $1.31.
The Core Lithium share price has since recovered a touch but remains down 7% to $1.35.
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Why is the Core Lithium share price being crushed?
Investors have been selling down this lithium miner's shares on Thursday after it released an update on its offtake agreement with Tesla.
As you might have guessed from the Core Lithium share price performance, it wasn't a positive update.
According to the release, the agreement to supply the electric vehicle giant with up to 110,000 dry metric tonnes of lithium spodumene concentrate from the Finnis Lithium Project is off.
That's because the date for concluding the term sheet was 26 October 2022 and passed without the agreement being completed.
Tesla's CEO, Elon Musk, has previously complained about how lithium prices were at ridiculously high levels, so it is possible the auto giant was playing hardball with negotiations.
What now?
Core Lithium doesn't appear concerned by the failure to complete the deal.
It notes that the recent official opening of the Finniss Lithium Mine has positioned the company to take advantage of strong global demand and constrained lithium supply.
The company highlights the recent sale of 15,000 tonnes of direct shipping ore (DSO) as proof of this. This DSO sale was tendered on a CIF basis to several pre-screened participants active in the lithium-ion battery supply chain and received a strong price.
Furthermore, agreements are in place with Ganfeng and Yahua that bring total concentrate sales under offtake contracts to about 80% of the Finniss Lithium Project production over the first four years of operations.
Core Lithium's CEO, Gareth Manderson, commented:
I want to thank Tesla for the time taken to negotiate with Core and look forward to maintaining an open and ongoing dialogue. The recent DSO sale, predicted commencement of lithium concentrate sales in H1 2023 and an increasing lithium price environment indicate that Core Lithium is well positioned to capitalise on the high demand and current shortage of available battery grade lithium spodumene concentrate.
