Altura signs spodumene offtake agreement with Hunan Yongshan Lithium

Australian spodumene producer Altura Mining has signed a supply deal for 2020 and a binding five-year offtake agreement with Chinese lithium producer Hunan Yongshan Lithium.

Altura will supply Hunan Yongshan Lithium, a subsidiary of Ningbo Shanshan, with 44,000 tonnes of 6% grade spodumene concentrate based on their contract for 2020.

Altura and Hunan Yongshan Lithium have also reached a binding five-year offtake agreement over the period of 2021-2025 with take or pay provisions commencing from January 2022, the producer said on Friday June 19. A minimum annual quantity of 60,000 tonnes were confirmed for contract years of 2022 to 2025.

The agreement also included an option to increase supply to 120,000 tonnes per year.

Prices will be based on a pricing formula on a dollar-cif basis linked to Altura production costs which will be also adjusted for spodumene concentrate quality. Additional product supply will be sold at a market price agreed between the parties.

“Shanshan’s decision to partner with Altura was well considered and very deliberate. Shanshan believe they have partnered with a reliable and long-term supplier of quality spodumene concentrate. Further they have seen Altura’s performance in the recent declining market as testament to Altura’s market leading operation. Our product quality, consistency and demonstrated ability to meet our cost structure positions Altura well. With Shanshan now a key customer, as well as major shareholder, our interests are well aligned,” Altura managing director James Brown said in a statement.

Ningbo Shanshan is a key anode and cathode maker in China and Altura’s second largest shareholder with a 15.1% stake. Hunan Yongshan has a planned phase 1 annual production capacity of 25,000 tonnes of lithium carbonate equivalent. Under an expansion of phase 2, total annual production will reach 45,000 tonnes. The plant commenced construction in April 2020.

Spodumene prices
Fastmarkets assessed the monthly price of spodumene, 5-6% Li2O min, cif China at $400-450 per tonne on May 27, down from $430-460 per tonne from the previous month and down by 15% from $470-530 per tonne in January.

A spodumene producer active in Australia acknowledged the current bearish trend in the spodumene market, saying: “While the short-term outlook is weak for prices, there are inquiries for new offtake that have not been placed in the market as yet.”

“There are several chemical conversion plants that are already commissioning, and there are more to be commissioned in the coming half [year]. With that in mind, it is reasonable to assume that spodumene demand conditions should further stabilize over the balance of the year.”

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