By Ernest Scheyder
Oct 12 (Reuters) - Lithium startup EnergyX said on Monday it has signed a $2 billion binding offtake to supply commodities trader Trafigura with the battery metal from Chile and the US, one of the largest deals ever tied to direct lithium extraction technology.
The 10-year agreement, which Reuters is first to report, comes as strong demand for lithium from the fast-growing stationary battery storage system market has offset uneven sales in the global electric vehicle market, which had
been the primary user of the ultralight metal for years.
Trafigura has agreed to buy 100,000 metric tons of lithium from EnergyX over a 10-year period as part of a take-or-pay contract. The deal's value is tied to current lithium prices near $20,000 per metric ton.
"This agreement reflects our ability to help bring strategic critical minerals projects online and build secure, diversified supply chains," said Daniel von Arx, Trafigura's head of battery metals.
As part of the agreement, Trafigura will buy 5,000 metric tons per year of lithium hydroxide and the same amount of lithium carbonate from EnergyX. Battery manufacturers typically prefer one version over the other, depending on what device the battery is powering.
EnergyX, which was formed in 2018 and is backed by General Motors and Italian energy company Eni, aims to start lithium production in 2028.
TRAFIGURA TARGETS US MARKET LONG TERM
The company plans to initially produce 15,000 metric tons per year of lithium hydroxide in Texas starting in 2029, meaning that Trafigura will buy 33% of that output.
In Chile, EnergyX plans to start producing 7,500 metric tons per year of lithium carbonate in 2028, with Trafigura's share reflecting 66% of the output in the South American nation.
Switzerland-based Trafigura plans to initially sell the lithium to Chinese customers, with the long-term goal of being a large supplier to US markets once the country's battery supply chain is developed.
EnergyX is among the companies pursuing direct lithium extraction (DLE), a broad classification of filtration technology comparable to household water softeners. Exxon Mobil, Vulcan Energy Resources and Lilac Solutions are among the others pursuing DLE.
While some are developing their own DLE systems, EnergyX has combined several known filtration technologies and built them with readily available equipment, a strategy that attracted Trafigura.
EnergyX has been testing its processes at its lab in Austin, Texas. It needs to obtain additional funds to build the Chile and Texas facilities.
The deal helps advance EnergyX's application with the US Export-Import Bank for a $690 million loan.
While privately held EnergyX has discussed a possible public listing in the past, CEO and company founder Teague Egan said he is now focused on supplying lithium to his first customer.
"We need to build and start producing commercial lithium in order to even think about having a public offering," said Egan.
When asked about the recent lithium market volatility, Egan said he expects demand to continue to rise and potentially outstrip supply in coming years.
"The fundamentals are strong," Egan said. "Year in and year out, the total global demand continues to rise."
Beyond lithium, Egan said EnergyX aims to expand into the uranium sector, with plans to mine and enrich the nuclear fuel.
"We see the demand curve for uranium today similar to what lithium was 10 years ago," he said.
Trafigura also has a lithium offtake with Standard Lithium, which is developing an Arkansas DLE project.
Trafigura rival Glencore has inked lithium deals with DLE developer Eramet and recycling startup Nth Cycle, among others.
(Reporting by Ernest Scheyder; Editing by Susan Fenton)
