US car manufacturer Ford has delayed any deliveries from one of Australia’s largest hard-rock lithium mines until at least 2029, and will halve the volume of the material it originally intended to purchase, amid a global slowdown in electric vehicle sales.
Western Australia’s Liontown Resources, backed by billionaire Gina Rinehart and the Commonwealth government, had an agreement with Ford Motor Company to begin supplying it with lithium from its Kathleen Valley mine from 2027, but on Thursday said it would not begin deliveries to the Michigan-based carmaker until 2029.
Kathleen Valley mine lithium deliveries to Ford have now been delayed to 2029. Credit: Jesinta Burton
Changes to its deal with Ford also include a reduction in the amount of lithium it would supply from more than 500,000 dry metric tonnes to 256,000. Demand for lithium, the key raw ingredient needed to build lithium-ion batteries, has cooled due to weaker electric vehicle uptake as consumers face pressure from inflation and persistent worries about the cost of living.
US President Donald Trump has also recently erased billions of dollars in tax credits for motorists to make the switch from petrol-powered to electric vehicles, fuelling expectations that sales could moderate further, prompting major carmakers to slow production and delay releasing new models.
Australia is home to some of the richest known reserves of lithium spodumene, a metal often referred to as “white gold” due to its silvery-white appearance and the fact it is an ingredient the world will need in far greater quantities to manufacture lithium-ion batteries to power electric cars and store renewable energy.
Since the dawning of the electric vehicle era, carmakers across the globe have been scrambling to lock in lithium supplies, striking long-term contracts with a slew of mining companies in WA and the Northern Territory
But Australia’s lithium sector has been in turmoil for years now as demand and prices collapsed, leading to write-downs, production cutbacks and some mine suspensions.
Liontown managing director Tony Ottaviano on Thursday said the changes to the offtake deal with Ford would enable Liontown to sell a greater volume of lithium into the market, where it could fetch higher prices as conditions improve.
“For Liontown, this agreement provides improved near-term balance sheet liquidity, retaining our debt facility with Ford, while giving the company strategic flexibility to sell greater volumes of spodumene concentrate via spot sales or to new strategic customers as the lithium market continues to evolve,” he said.
