Pilbara Minerals share price jumps on deal with Tesla supplier

This lithium miner has signed a new offtake agreement this morning.

| More on:
A woman in jeans and a casual jumper leans on her car and looks seriously at her mobile phone while her vehicle is charged at an electic vehicle recharging station.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Pilbara Minerals Ltd (ASX: PLS) share price is charging higher on Tuesday morning.

At the time of writing, the lithium miner's shares are up almost 5% to $4.19.

Why is the Pilbara Minerals share price jumping?

Investors have been bidding the company's shares higher today after it announced a new offtake agreement.

According to the release, Pilbara Minerals has executed a new offtake agreement with Sichuan Yahua Industrial Group (Yahua) for the supply of spodumene concentrate from its 100% owned Pilgangoora Operation.

Yahua is a leading lithium chemicals company and one of the largest lithium hydroxide producers globally. It has strong connections across the lithium supply chain with key customers including Tesla, LG Energy Solutions, LG Chem, and CATL.

Pilbara Minerals advised that the agreement starts in 2024 and will be for the following supply:

  • 2024: 20kt of spodumene concentrate (with an option for up to an additional 60kt at Pilbara Minerals' election) resulting in a total supply of between 20kt to 80kt.
  • 2025: 100kt of spodumene concentrate (with an option for up to an additional 60kt at Pilbara Minerals' election) resulting in a total supply of between 100kt to 160kt.
  • 2026: 100kt of spodumene concentrate (with an option for up to an additional 60kt at Pilbara Minerals' election) resulting in a total supply of between 100kt to 160kt.

Management notes that consistent with its other existing agreements, all spodumene concentrate volumes will be sold based on the prevailing market price.

'Delighted'

Pilbara Minerals' managing director and CEO, Dale Henderson, was very happy with the news. He said:

We are delighted to have signed this offtake agreement with Yahua, a leading global lithium chemicals producer which has extensive supply chain relationships with major battery materials customers globally.

This offtake builds-on an established relationship between our companies, having previously completed a number of sales together. The agreement enables Yahua to further expand its supply chain commitments with key global battery customers and builds-out Pilbara Minerals medium-term sales profile whilst preserving long-term optionality as we assess downstream opportunities in-line with our growth strategy.

The Pilbara Minerals share price is up 8% over the last 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

Are BHP shares a bargain buy?

Are analysts bullish on this beaten down mining stock? Let's find out.

Read more »

A group of people in suits and hard hats celebrate the rising share price with champagne.
Materials Shares

This ASX mining stock is jumping 11% on big news

This miner is having a good session on Thursday. Let's find out why.

Read more »

Lion leaping with mouth open, symbolising a rising Liontown share price.
Materials Shares

Why is the Liontown share price leaping 9% on Tuesday?

This ASX lithium share is the fastest mover of the ASX 200 today.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Materials Shares

Why is this ASX 300 lithium stock sinking 17% today?

What's going on with this lithium stock today? Let's find out.

Read more »

Man holding a calculator with Australian dollar notes, symbolising dividends.
Materials Shares

$10k invested in Pilbara Minerals shares 5 years ago is now worth…

Let's see if this lithium miner delivered the goods for investors.

Read more »

Female miner in hard hat and safety vest on laptop with mining drill in background.
Broker Notes

Experts reveal 2 buys and 1 sell in the ASX 200 materials sector

And they're not all mining companies, either.

Read more »

A woman jumps for joy with a rocket drawn on the wall behind her.
Materials Shares

Pilbara Minerals shares jumps 10% on big news

This lithium miner is having a day to remember on Wednesday. But why?

Read more »

Three miners looking at a tablet.
Materials Shares

Why Bell Potter says this ASX mining stock is a top buy

Let's see which stock the broker is tipping to deliver big returns.

Read more »