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 holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Materials Shares

Down 39% in a year, why IGO shares still look overpriced

A leading expert doesn’t believe IGO shares are out of the woods just yet.

Read more »

Man with rocket wings which have flames coming out of them.
Materials Shares

This ASX 300 stock is surging 25% on US defence deal

The announcement of a 'a pivotal milestone' is getting investors excited today.

Read more »

A happy construction worker or miner holds a fistful of Australian dollar notes.
Materials Shares

$5,000 invested in BHP shares 5 years ago is now worth…

Will its shareholders be happy with their investment? Let's find out.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Materials Shares

Guess which ASX 200 stock is ending the week with a bang thanks to Rio Tinto

This stock has won a major contract from the mining giant.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Materials Shares

Is it time to buy ASX lithium shares?

Lithium prices continue to sink. Has this created a buying opportunity?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Materials Shares

Mineral Resources shares sink on Onslow Iron blow

This miner is having a tough session. Let's find out why.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Materials Shares

MAC Copper shares in trading halt as miner flags 'potential control transaction'

MAC Copper shares are frozen while Sandfire Resources shares are the fastest risers of the ASX 200 today.

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Materials Shares

Bell Potter says this ASX lithium stock could rise ~50%

The broker has just put a buy rating on this lithium stock.

Read more »