Galaxy Resources has locked in a three-year offtake agreement with Sichuan Chengtun Lithium for its spodumene concentrate from the Mt Cattlin project in Western Australia.
The offtake will commence in 2021 and see a minimum of 60,000 tonnes per year of spodumene concentrate from Mt Cattlin delivered to Sichuan Chengtun Lithium.
The miner has ended its contract with Yi Chun Yin Li Energy, with Galaxy allocating their tonnage to the new offtake agreement with Sichuan, a subsidiary of Chengxin Lithium Group,
Under the agreement, Galaxy’s spodumene will be based on spot cargo prices for 2021, which will shift to market-based pricing for 2022 and 2023.
Galaxy chief executive officer Simon Hay said more shipments in 2020 still remain scheduled as the company looks to bring its inventory back to normal levels, with a possibility to ramp up Mt Cattlin next year.
“We are pleased to welcome Chengxin as a new major offtake partner, further diversifying and strengthening Galaxy’s customer base to support Mt Cattlin’s operations. Chengxin also has expansion plans underway to increase production capacity in preparation for the impending lithium demand surge in the medium to long term,” he said.
“As previously advised, we expect to conclude 2020 with additional shipments to customers and for Galaxy’s spodumene inventory to return to normal levels.
“The drawdown of inventory combined with strong customer indications for demand in 2021 has also led Galaxy to examine the potential ramp up of Mt Cattlin back to full rate in 2021, although there will need to be sustained price increases for us to commit to the return of higher production levels.”
Galaxy’s existing long term spodumene concentrate ifftake agreements with Yahoo International Investment and Development for 120,000 tonnes, and Meiwa Corporation for 55,000 tonnes, will both remain in place.
The Mt Cattlin spodumene project has produced high-quality lithium concentrate since it recommenced production in late 2016.