China’s Yahua agrees five-year deal to supply lithium to Tesla

China’s Sichuan Yahua Industrial Group Co Ltd said on Tuesday it had signed a deal to supply battery-grade lithium hydroxide to U.S. electric vehicle manufacturer Tesla (NASDAQ:TSLA) Inc for the next five years.

Yahua, which is based in southwest China’s Sichuan province, did not provide tonnage figures but, in a filing to the Shenzhen Stock Exchange, put the total value of the contract at $630-880 million over 2021-25.

Tesla, which started delivering the first vehicles from its gigafactory in Shanghai in December last year, already sources lithium – a key ingredient in EV batteries – from China’s Ganfeng Lithium, one of the world’s biggest producers of the commodity.

Tesla did not immediately respond to a request for comment on Tuesday.

In May this year, Yahua put a 20,000 tonnes per year lithium hydroxide plant into operation, more than doubling its previous capacity, even as prices languished at multi-year lows amid oversupply and a knock to lithium demand brought about by the coronavirus pandemic.