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Galaxy will continue to provide Sichuan Yahua with spodumene beyond the existing offtake agreement period of January 1, 2018, to December 31, 2022.
Yahua has agreed to purchase 6% grade spodumene concentrate from Galaxy with a further 30,000 tonnes over the rest of 2020, and an annual volume of 120,000 tonnes for each calendar year from 2021 to 2025 on a take-or-pay basis from Mt Cattlin in Western Australia.
Prices will be agreed between the parties on a spot cargo cif (cost, insurance and freight) basis till the end of 2022, and they also agreed on a pricing mechanism for the period from 2023 to 2025 to be set up before the end of 2022.
Chinese lithium producer Yahua opened a new plant with a production capacity of 20,000 tonnes per year of lithium hydroxide in the city of Ya’an in Sichuan province on May 18 this year.
The extension of the offtake agreement with Yahua supplements Galaxy’s existing offtake agreements with Meiwa Corp and Yi Chun Yin Li New Energy.
Galaxy supplies 55,000 tpy of 5.7% grade spodumene concentrate to Meiwa Corp under an offtake agreement up to December 31, 2022, and supplies 6% spodumene concentrate to Yichun Yinli. Galaxy will supply 45,000 tonnes in 2020 and an annual volume of 60,000 in 2021 and 2022 on a take or pay basis.
Pricing for spodumene shipments sold to Meiwa and Jiangte will be agreed between the parties on a cif basis. All the supply volume can fluctuate by 10% on either side.
Galaxy said due to the extended period of weak demand across the entire lithium value chain, its near-term sale volumes and shipping schedules are dictated by the pace its customers can work through their existing inventory levels.
Oversupply of lithium carbonate and hydroxide in the global market alongside lower-than-expected demand from the battery industry has been pushing down spodumene prices. The unexpected Covid-19 outbreak has made demand in the whole supply chain even weaker.
Fastmarkets assessed the monthly price of spodumene, 5-6% Li2O min, cif China at $400-430 per tonne on June 24, down from $400-450 per tonnes from the previous month and down by 15% from $470-530 per tonne in January.
Fastmarkets assessed the price of lithium hydroxide monohydrate 56.5% LiOH.H2O min, battery grade, spot price range exw domestic China at 45,000-51,000 yuan ($6,428-7,285) per tonne on Thursday July 9, down 2% week on week and around 12% down from the beginning of 2020.