Commodity trading company Trafigura is buying 100,000 metric tons of battery-grade lithium products under a 10-year offtake agreement with Energy Exploration Technologies Inc. (EnergyX), with a significant share of the volume expected to enter the US battery supply chain.
EnergyX, which produces lithium using its proprietary direct lithium extraction technology, signed a binding take-or-pay deal, announced by both companies on 12 October, for products from EnergyX’s Project Black Giant in Antofagasta, Chile, and Project Lonestar in Texas. Under the deal, Trafigura will buy 66% of Phase 1 lithium carbonate offtake from Black Giant and 30% of Phase 1 lithium hydroxide offtake from Lonestar.
Project Lonestar, located near Texarkana in East Texas, is designed to produce lithium hydroxide from approximately 47,500 acres in the Smackover Formation. EnergyX reports in-situ lithium of up to 3.2 million tonnes with a concentration of 520 mg/L.
EnergyX said the agreement, the company’s first publicly announced lithium offtake agreement, is worth over $2 billion in revenue at current market prices of nearly $20,000 per metric ton.
An offtake agreement is an important step in moving a lithium project from the development phase to production, Teague Egan, EnergyX founder and CEO, said in a news release. The commit from a party of “Trafigura’s scale and credit quality” gives lenders and investors “the revenue visibility they need before committing capital to commercial construction," he said.
EnergyX called the Tragifura offtake agreement a turning point for the company, which has proven its technology in the lab, at pilot scale, and at its demonstration plants the Black Giant and Lonestar projects. The company targets commercial production at Black Giant in 2028 and at Lonestar in 2029.
Eni has made a $225 million investment in Project Black Giant, and there is a $690 million letter of intent from US EXIM Bank to provide debt financing for that project.
EnergyX said it is in active discussions with additional prospective buyers to reach 80% offtake for Black Giant as it moves that project toward production.