Tesla Deal Sends Lithium Stock Soaring 236% - Barron's

Piedmont’s deal with Tesla is for five years of lithium-ore supply with an extension for... — Piedmont’s deal with Tesla is for five years of lithium-ore supply with an extension for another five years..
David Paul Morris/Bloomberg

Shares of aspiring lithium miner Piedmont Lithium soared Monday after the company signed a deal with Tesla. The deal is a sign that Tesla is focused on the supply chain for electric-vehicle batteries. The move also shows what can happen when an EV behemoth decides to make a move.

Piedmont (ticker: PLL) is a tiny company with no sales and a market capitalization of about $130 million, before the deal was announced. Piedmont’s U.S.-listed American depositary receipts closed at $37, up 236%. More than 48 million shares changed hands. There are only about 12 million shares outstanding. The company ended the day with a market value of more than $430 million. (The Australian-listed stock soared, as well.)

Tesla (TSLA) has a market value of about $380 billion, making it the world’s more valuable auto maker by a wide margin.

The deal is for five years of lithium-ore supply with an extension for another five years. Deliveries are expected to start in 2022. Piedmont referred Barron’s to its news release and Tesla wasn’t immediately available for additional comment about it’s supply needs. Piedmont stock is listed in Australia but its assets are in the U.S., with a mine planned in North Carolina. Piedmont plans to make Lithium from hard rock ore. Most of the world’s lithium today comes from evaporating salt from brine ponds.

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Today’s battery technology is lithium-ion based. The supply chain issues are on Tesla CEO Elon Musk’s mind. “We’re not getting into the [battery] cell business because we—just for the hell of it,” Musk said at the company’s Sept. 22 battery-technology day. “It’s because it’s the fundamental constraint. It’s the thing that is the limiting factor for rapid growth.” Tesla also announced plans to invest in its own lithium extraction at the event.

Piedmont stock was up about 33% year to date through Friday. The last time shares traded was Sept. 17. Tesla stock is up about 400% year to date, far better than comparable returns of the S&P 500 and Dow Jones Industrial Average.

Stock in other lithium producers Livent (LTHM), SQM (SQM) and Albemarle (ALB) all rose on Monday.

Write to Al Root at allen.root@dowjones.com

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