China-based lithium salts producer Sichuan Yahua Industrial has recently announced an extension to its lithium hydroxide supply agreement with Tesla. The agreement, originally set to expire in 2025, has been renewed until the end of 2030. Under the terms of the agreement, Yahua will supply Tesla with a total of 207,000-301,000 tons of battery-grade lithium hydroxide over the duration of the contract.
Sichuan Yahua Industrial is one of the oldest chemical enterprises in China, established shortly after the founding of the People’s Republic of China. The company operates in two main businesses: lithium and explosives. Currently, Yahua has a lithium salt production capacity of 73,000 tons, which includes subsidiaries such as Lithium Technology, Ya’an Lithium, Sichuan Guoli, and Xingsheng Lithium.
Looking ahead, Yahua has set a target to double its lithium salts output capacity to over 173,000 tons per year by 2025. To achieve this, the company plans to invest in lithium salt production bases in North America, Europe, Africa, and other countries, depending on the progress of overseas lithium resources development.
In addition to the agreement with Tesla, Yahua has also secured supply agreements with other major players in the industry. The company has signed a contract with South Korea’s SK New Energy (Shanghai) to supply 20,000-30,000 tons of battery-grade lithium hydroxide from its subsidiary Yahua (Ya’an) between 2023 and 2025. Furthermore, South Korea’s LG Energy Solution will purchase up to 30,000 tons of battery-grade lithium hydroxide from Yahua (Ya’an) over the same period.
These supply agreements highlight the growing demand for lithium hydroxide, a critical component in the production of lithium-ion batteries used in electric vehicles. As the global shift towards electric mobility continues, securing a long-term and stable lithium supply is crucial for companies like Tesla, SK New Energy, and LG Energy Solution. With its expansion plans and strategic partnerships, Sichuan Yahua Industrial aims to play a significant role in meeting this increasing demand for lithium salts in the coming years.
