Global demand for lithium remains buoyant…
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The Ioneer Ltd (ASX: INR) share price is gaining today, up 1.43% after earlier posting gains of more than 6%.
Below we take a look at the details of the emerging lithium producer’s offtake agreement.
What did Ioneer announce?
In a mid-day release yesterday (when the Ioneer share price closed up 3%), Ioneer announced it had signed a binding offtake supply agreement with EcoPro Innovation Co Ltd. The agreement is subject to Ioneer reaching a final investment decision (FID).
EcoPro is the second largest manufacturer of nickel cobalt aluminium oxide (NCA) cathode materials in the world. It supplies cathodes to battery manufacturers.
Under the 3-year agreement, EcoPro will source lithium carbonate from Ioneer’s Rhyolite Ridge lithium-boron project in the US state of Nevada. It will then convert this into high purity lithium hydroxide.
Ioneer will deliver up to 7,000 tonnes per annum (tpa) of lithium carbonate to EcoPro over a 3-year period. This will comprise an initial 2,000 tpa with an option for 5,000 additional tpa, If both parties agree before Q1 2022.
According to the release, this is Ioneer’s first lithium offtake agreement. It represents approximately 34% of its total lithium carbonate output for the first 3 years of production. The company expects to start production towards the end of 2023.
Commenting on the agreement, Ioneer’s managing director Bernard Rowe said:
It is our first lithium offtake agreement and partnering with a recognised world leader in cathode materials manufacturing is a testament to the quality of our lithium carbonate. Following a pilot plant tour in mid-2019 and detailed testing of our product samples, we are pleased that EcoPro found that our materials meet its exacting standards…
EcoPro’s president Anthony Kim added:
Ioneer’s lithium carbonate is well suited for conversion to high purity lithium hydroxide with a minimal environmental footprint. The US location of Rhyolite Ridge, coupled with the growing importance of the EV sector, positions both companies to play an important role in the electrification of transportation in the USA.
Ioneer share price snapshot
Over the past 12 months, Ioneer shares have gained 173%. In comparison, the All Ordinaries Index (ASX: XAO) has posted 25% gains during this time.
Year-to-date the Ioneer share price has continued to outperform, up 26%.
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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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 Bruce Jackson.