Australia-listed Liontown Resources announced on Wednesday its first binding offtake deal for the Kathleen Valley project in Western Australia with battery manufacturer LG Energy Solution (LGES).

The parties signed a binding term sheet with a view to finalise negotiations into a definitive full offtake agreement by 28 February. Under the deal, Liontown will supply up to 150,000 dry metric tonnes (dmt) per year of spodumene concentrate to the South Korean company. Deliveries should commence with the project’s start-up in Q2 2024 for a five-year term, extendable for another five years, Kallanish reports.

The offtake represents one-third of the project’s start-up production capacity of around 500,000 t/y. Supply in the first year of the contract will be of around 100,000 t/y, rising to 150,000 t/y in the remaining term. Pricing will be based on a formula-based mechanism linked to market prices for lithium hydroxide monohydrate (LHM) at the time of shipment, Liontown says.

“Not only is this offtake term sheet consistent with our strategy, it also represents a strong validation for the Tier-1 credentials of the Kathleen Valley Project as one of the world’s premier new spodumene projects,” comments Liontown’s ceo Tony Ottaviano.

Having LGES as a foundation customer endorse the project, he adds, noting Liontown’s ambition to become a “globally significant provider of battery materials.” The company continues to negotiate further offtake deals with several Tier-1 customers, seeking to establish a diverse portfolio of takers both geographically and in the position within the global battery value chain.

LGES has the right to terminate the agreement if production and supply don’t commence by 30 June, 2025.