Tesla will take 100,000 tonnes in the first year and then 150,000 tonnes a year for the next four years.

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Demand from vehicle manufacturers and their battery suppliers is driving the strong market. In 2020 Tesla predicted its demand for lithium in 2030 would exceed the production forecasts of the entire lithium mining sector.

Liontown plans to initially produce about 500, 000 tonnes of spodumene a year, expanding to 700,000 tonnes later.

The Tesla deal is conditional on Kathleen Valley starting commercial production by 2025.

Chairman Tim Goyder is seeking $121 million from banks to complete the funding required for the project. Liontown appears to be another success for Mr Goyder who founded Chalice Mining which is developing the Julimar copper and nicked mine in forests near Perth.

In December Mr Ottaviano said the cost to build Kathleen Valley had been hit by the tight WA labour market, which has been further squeezed by COVID-induced travel restrictions.

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