Trafigura Signs Lithium Offtake Agreement with EnergyX

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Written by Amir Richani for IIR News Intelligence (Sugar Land, Texas)

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Summary

Trafigura has agreed to buy 100,000 tonnes of battery-grade lithium products over 10 a year period from EnergyX's projects in Chile and the United States.

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A New Agreement

Trafigura signed a 10-year offtake agreement with Energy Exploration Technologies (EnergyX) to purchase 100,000 tonnes of battery-grade lithium products from its projects in the United States and Chile.

At current market prices, the agreement could generate more than US$2 billion in revenue for EnergyX over the 10-year period, based on lithium prices of approximately US$20,000 per tonne. Actual revenue, however, will depend on future prices and delivered volumes.

In Chile's Antofagasta region, EnergyX is developing the Black Giant/Mejillones lithium project, which is planned to have an initial production of 7,500 tonnes of lithium carbonate per year during Phase I. Meanwhile, Phase II would expand production by another 45,000 tonnes of lithium carbonate per year. According to Industrial Info Resources database, the two Black Giant projects represent US$258 million in investments.

Industrial Info Resources data show Phase I of Black Giant is expected to be completed by third-quarter 2028, while Phase II could be operational by the end of 2029.

As part of the signed agreement, Trafigura has agreed to purchase 66% of Phase I offtake from Black Giant.

Meanwhile, EnergyX's Lonestar project in Texas, United States, is forecast to cost US$1.2 billion and is expected to be developed in two phases. Stage I will aim to develop a capacity of 12,500 tonnes of lithium hydroxide per year, while Stage II would expand production by 37,500 tonnes per year.

According to Industrial Info Resources data, Phase I of Lonestar could be completed by mid-2028, while the Phase II expansion could be finalized by April 2030. Trafigura has agreed to buy 30% of Lonestar's Phase I offtake.

EnergyX also is negotiating with additional buyers to secure offtake agreements for 80% of its production.

"Offtake agreements are among the most important steps in taking a lithium project from development to production. A long-term purchase commitment from a counterparty of Trafigura's scale and credit quality shows that the market wants EnergyX's product," said Teague Egan, chief executive officer of EnergyX.

Industrial Info Resources is tracking nine EnergyX projects in Chile and the United States representing US$2.56 billion in planned investments.

The offtake agreement strengthens EnergyX's position to secure financing for its projects. Trafigura said the agreement supports the bankability of both projects, with offtake being a key requirement for EnergyX's financing from the U.S. EXIM Bank and additional project finance lenders.

So far, EnergyX received a letter of intent from U.S. EXIM Bank for US$690 million in potential financing for its projects. Separately, Eni announced investments of US$225 million for a 25% stake in the Black Giant Chilean project.

Lithium Prices

Lithium prices have declined over the last few days. The decline has been stressed by an agreement between the European Union and China that could cut European imports of hybrids and plug-in hybrid vehicles from the Asian Giant by more than 50%. "First, we have reached a shared understanding to moderate China's exports of hybrids and plug-in hybrids to the EU. This opens the prospect of cutting China's exports by more than a half," said Maros Sefcovic, European Union Commissioner of Trade and Economic Security. Additionally, growing lithium supply and lower-than-expected sales of electric vehicles are putting pressure on prices.

Key Takeaways

• Trafigura agrees to buy 100,000 tonnes of battery-grade lithium products from EnergyX's Chilean and U.S. projects over 10 years.
• The agreement would represent US$2 billion in revenues based on current prices.
• The offtake agreement supports EnergyX's efforts to secure financing for its projects.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).