A Chinese company will supply lithium to Northvolt’s northern Sweden plant

Lithium for the Skellefteå plant will come from Tianqi Lithium Corp's plant in Western Australia.

BEIJING — China’s Tianqi Lithium Corp, one of the world’s biggest lithium producers, said on Tuesday that its Australian unit had signed a long-term supply agreement with Swedish battery maker Northvolt.

Tianqi Lithium Kwinana, which recently launched a processing plant in Western Australia, will supply lithium hydroxide, a chemical used in electric vehicle (EV) batteries, to Northvolt Ett from 2020-25, Tianqi said in a filing to the Shenzhen Stock Exchange.

Northvolt Ett is the name of Northvolt’s planned lithium-ion battery plant in Skellefteå, in northern Sweden. What will be Europe’s largest such plant is due to begin production in 2021 and counts German automakers Volkswagen and BMW among its investors.

The filing gave no absolute tonnage figure for the deal but said that the volume supplied each year would be no lower than 6-10 percent of Tianqi Kwinana’s annual capacity.

The deal marks the second major customer win for Tianqi in a little more than a month. The company announced on Aug. 22 that it had signed up South Korea’s LG Chem on a three-year deal covering 2020-22 for no less than 15 percent of Kwinana’s annual capacity.

Tianqi Lithium Kwinana started production of lithium hydroxide this month, with its first phase output to ramp up to the full 24,000 tonnes a year over the next 12-18 months.

Capacity will double to 48,000 tonnes with a second stage, though Tianqi has put that on hold until the ramp-up of the first phase is complete because lithium prices remain depressed.

Amid a wave of new supply and adjustments to EV subsidies in China, lithium hydroxide prices, as assessed by industry information provider Asian Metal, have fallen by 36.8 percent this year to 67,000 yuan ($9,428.25) a tonne.

Reporting by Tom Daly and Min Zhang.