Core Lithium Scraps Ganfeng Lithium Offtake Deal, Shifts to Spot Sales for Finniss Mine

Australia’s Core Lithium Scraps Li Offtake Deal with Ganfeng Lithium

Australian lithium producer Core Lithium has officially terminated its offtake agreement with Chinese producer Ganfeng Lithium. This move provides Core with greater flexibility for future spodumene production from its Finniss mine in the Northern Territory, Australia. Previously, Core had committed to supplying Ganfeng with 75,000 tonnes per year of spodumene for a four-year period. However, with the termination of this agreement, Core will now be able to sell its future production on the spot market, an option that could offer better pricing flexibility.

Core Lithium’s Strategic Shift: Terminating Deals Amid Lithium Price Fluctuations

Core’s decision to exit the agreement follows a similar move earlier this year when it ended another 75,000 tonnes per year offtake deal with Chinese producer Yahua, also for a $2 million payout. The company’s goal is to focus on reactivating the Finniss mine, which is currently on care and maintenance after being placed under temporary shutdown in mid-2024. The termination of these contracts comes at a time of significant volatility in lithium prices, which have seen fluctuations in the past few months.

As of late September, the price of spodumene concentrate (6% Li2O) had decreased from $1010 per tonne in August to $830 per tonne. The drop in prices follows a production pause at CATL’s Jianxiawo mine in Jiangxi province, China, which caused a temporary price spike. Core Lithium sees this market volatility as a reason to pivot its sales strategy, opting for the spot market where it can potentially command better prices when conditions are favorable.

Future Plans for the Finniss Project: A Path to Restart

Core Lithium remains optimistic about the future of its Finniss project. The company plans to resume production at the Finniss mine at an annual rate of 205,000 tonnes of spodumene. However, it requires significant capital—estimated between $175 million and $200 million—to fund the restart. Core is currently in discussions with potential investors but has not yet announced a definitive timeline for the plant’s reopening.

By canceling these offtake agreements, Core is freeing up its lithium production for future negotiations, partnerships, or potentially more lucrative spot sales. This strategy is seen as a way to raise capital for the restart of the Finniss mine and to capitalize on more flexible market conditions.

SuperMetalPrice Commentary:

Core Lithium’s decision to scrap its offtake agreements with Ganfeng and Yahua signals a strategic shift in the company’s approach to the lithium market. With the volatility in lithium prices and the changing dynamics in the global supply chain, Core may benefit from this flexibility, enabling it to better adapt to fluctuating demand and pricing. As the lithium market continues to evolve, it will be crucial for producers like Core to assess their sales strategies and balance short-term opportunities with long-term growth plans. The future of the Finniss mine remains uncertain, but with the right funding and market conditions, Core could play a significant role in the global lithium supply chain.