Key facts
- EnergyX and Trafigura signed a 10-year, $2 billion binding offtake agreement for lithium.
- Trafigura will buy 100,000 metric tons of lithium from EnergyX over 10 years.
- The deal's value is tied to lithium prices near $20,000 per metric ton.
- EnergyX plans to produce 5,000 metric tons per year of lithium hydroxide and 5,000 metric tons per year of lithium carbonate for Trafigura.
- EnergyX aims to start lithium production in Chile in 2028 and in Texas in 2029.
- EnergyX is backed by General Motors and Italian energy company Eni.
Lithium startup EnergyX announced on Monday it has secured a binding 10-year offtake agreement with commodities trader Trafigura valued at $2 billion. The deal will see Trafigura purchase 100,000 metric tons of lithium from EnergyX's projects in Chile and the United States, with the price tied to current market rates near $20,000 per metric ton.
This agreement is significant as it is one of the largest deals ever linked to direct lithium extraction (DLE) technology. Demand for lithium from the stationary battery storage sector has been robust, helping to counterbalance uneven sales in the electric vehicle market, which has historically been the primary driver of lithium demand.
Under the terms of the take-or-pay contract, Trafigura will purchase 5,000 metric tons per year of lithium hydroxide and 5,000 metric tons per year of lithium carbonate from EnergyX. The specific form of lithium preferred by battery manufacturers often depends on the intended application.
EnergyX, founded in 2018 and supported by investors including General Motors and Eni, aims to commence lithium production in 2028. The company plans to produce 15,000 metric tons per year of lithium hydroxide in Texas starting in 2029, with Trafigura set to buy 33% of this output. In Chile, EnergyX intends to produce 7,500 metric tons per year of lithium carbonate starting in 2028, with Trafigura securing 66% of that production.
Switzerland-based Trafigura initially plans to sell the lithium to Chinese customers, with a long-term objective of becoming a major supplier to the US market as its domestic battery supply chain develops. EnergyX is among several companies exploring DLE, a filtration technology similar to household water softeners. The company has combined several filtration technologies and built its system using readily available equipment, a strategy that appealed to Trafigura.
EnergyX has been testing its DLE processes at its lab in Austin, Texas, and is seeking additional funding for its Chile and Texas facilities. The deal also supports EnergyX's application for a $690 million loan from the US Export-Import Bank.
Teague Egan, CEO and founder of EnergyX, stated that his immediate focus is on building and commencing commercial lithium production before considering a public offering. He anticipates continued strong demand for lithium, potentially exceeding supply in the coming years. Beyond lithium, EnergyX has ambitions to enter the uranium sector.
Trafigura also has a lithium offtake agreement with Standard Lithium, and rival Glencore has made similar deals with other DLE developers.