Tesla threatens Core Lithium with legal action

The failed lithium supply deal between Tesla and the Australian producer Core Lithium could have legal repercussions. According to Core, Tesla is threatening the company with legal action over the failed lithium supply contract if the matter cannot be resolved otherwise.

Under the terms of the supply agreement, which was signed in March 2022 and appears to be provisional, Tesla was to be supplied with spodumene concentrate from the Finniss project in northern Australia from the second half of 2023 – up to 110,000 tonnes over the entire term. At the time the contract was signed, production was not yet underway; this was planned for the end of 2022.

Core Lithium could indeed start up the Finniss lithium mine in 2022, but Core and Tesla could not agree on a binding contract within the deadline set in the preliminary agreement by the end of October, but background information was not given at the time. But apparently, certain sanctions were already agreed in the March term sheet if the deal did not materialise.

As it is now stated in a presentation by Core Lithium around a capital increase, Tesla is threatening legal action. Tesla will pursue “all available legal remedies” unless the parties resolve the matter amicably, the Australian company wrote in the document. It adds: “Should these efforts fail, each party intends to avail itself of all legal and equitable remedies.”

Neither Tesla nor Core Lithium would comment on the matter when asked by Reuters. It is therefore unclear whether there is really legal trouble ahead at this point or whether Core Lithium is merely making the process transparent in the prospectus for the capital increase in order to protect itself from potential investor lawsuits – should proceedings with Tesla follow, which the company has concealed from investors.

reuters.com, weblink.com.au (PDF, Info on page 18)