Trafigura signs $2 billion lithium supply deal with EnergyX
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Global commodities trader Trafigura has signed a 10-year lithium supply agreement with US-based EnergyX, securing 100,000 metric tons of battery-grade lithium products from projects in Chile and Texas.
The agreement, announced on Oct. 12, is valued at more than $2 billion based on current lithium prices. It covers lithium carbonate from EnergyX’s Black Giant project in Chile and lithium hydroxide from its Lonestar project in Texas.
Trafigura will purchase 66% of the first phase of output from Black Giant and 30% from Lonestar. EnergyX expects commercial-scale production to begin in Chile in 2028 and Texas in 2029.
The deal gives EnergyX a major buyer as it seeks financing for both projects. It also expands Trafigura’s access to lithium supplies, with a significant share expected to serve the US battery industry.
The agreement comes as lithium producers face growing pressure to secure investment, despite expectations of strong long-term demand from electric vehicles and battery storage systems.
Long-term lithium contracts could help secure project financing
One of the main benefits of the Trafigura agreement is the financial support it could provide to EnergyX’s development plans.
Lithium projects require substantial investment before production can begin. Developers must fund engineering, construction and processing facilities, often years before they generate revenue.
Long-term supply agreements can make these projects more attractive to lenders by providing greater certainty over future sales.
Under the 10-year agreement, Trafigura has committed to purchasing lithium from EnergyX through a take-or-pay contract. Such agreements generally require buyers to purchase agreed volumes or make payments under specified conditions.
For EnergyX, this commitment could strengthen its position in discussions with banks and investors.
The agreement supports the company’s financing efforts, including a $690 million letter of intent from the Export-Import Bank of the United States.
Although that financing has not been finalized, the supply contract addresses an important requirement for lenders considering large mining and processing projects.
EnergyX has also attracted investment from energy companies seeking greater exposure to lithium production.
In July 2026, Italian energy company Eni agreed to invest $225 million in the Black Giant project in Chile. The phased investment will give Eni a 25% stake in the project company.
The combination of equity investment and long-term supply commitments could help EnergyX move toward commercial production.
However, the reported $2 billion contract value is based on lithium prices of approximately $20,000 per metric ton. Actual revenue will depend on market conditions, contract terms and the company’s ability to deliver the agreed volumes.
These factors remain important in a market where changes in battery demand and lithium prices can affect the financial outlook for new projects.
Direct lithium extraction faces its next commercial test
The agreement also places greater attention on EnergyX’s direct lithium extraction technology, known as DLE.
Conventional lithium production from brine often relies on large evaporation ponds, where water evaporates over several months to concentrate the lithium.
DLE uses specialized processes to separate lithium from brine without relying on lengthy evaporation periods.
The technology has attracted interest because it could shorten production times and reduce the land required for evaporation facilities. However, its performance depends on the extraction method and the conditions at each project.
EnergyX plans to use its proprietary DLE technology at both Black Giant and Lonestar.
The company has spent several years developing and testing its extraction systems. Its next challenge is to prove that the technology can deliver reliable output at commercial scale.
Black Giant, located in northern Chile, is designed to produce up to 52,500 metric tons of lithium carbonate equivalent annually across its first two development phases. The initial phase is expected to begin production in 2028, with a planned capacity of 7,500 metric tons per year.
The Lonestar project in Texas is expected to produce lithium hydroxide, a processed material used in certain rechargeable battery types.
Both projects form part of EnergyX’s plans to establish new lithium production capacity in North and South America.
However, commercial DLE operations still face technical and financial challenges.
Extraction performance can vary depending on the chemical composition of the brine. Operators must also manage processing costs, equipment reliability, water use and the quality of the final lithium product.
Results from demonstration facilities do not guarantee the same performance at larger plants.
For battery manufacturers, consistent production will be as important as overall capacity. Suppliers must meet strict quality standards to deliver materials suitable for battery manufacturing.
Trafigura’s agreement provides a commercial buyer for future output, but EnergyX must still complete project development and meet its operating targets.
The planned production starts in 2028 and 2029 will therefore provide important measures of the company’s progress.
Trafigura’s lithium agreements point to a wider supply strategy
The EnergyX contract follows another major lithium supply agreement signed by Trafigura earlier in 2026.
In March, the company agreed to purchase 80,000 metric tons of battery-grade lithium carbonate over 10 years from Smackover Lithium’s South West Arkansas project.
The project, developed by Standard Lithium and Equinor, also plans to use direct lithium extraction technology.
Together, the two agreements cover 180,000 metric tons of future lithium products over their respective contract periods.
The deals suggest Trafigura is expanding its position in lithium trading as automakers, battery manufacturers and energy storage developers seek dependable supplies.
They also show how commodity traders can support new mineral projects before production begins.
This approach comes during a difficult period for lithium investment.
According to the International Energy Agency’s Global Critical Minerals Outlook 2026, investment by lithium-focused companies fell around 40% in 2025.
The decline occurred despite continued growth in battery demand. Global battery demand increased by more than 35% in 2025, driven by electric vehicles and energy storage systems.
Looking further ahead, the IEA expects lithium demand to more than triple by 2040 under its stated policies scenario.
These trends present a challenge for the industry. New lithium projects require investment years before they can supply customers, while short-term price changes can discourage spending.
Long-term supply agreements may help address some of these concerns by giving developers greater visibility over future demand.
For US manufacturers, the Trafigura and EnergyX agreement could also support efforts to diversify lithium sourcing.
The deal includes planned production in Texas alongside supplies from Chile, one of the world’s established lithium-producing countries.
However, additional production capacity will only strengthen battery supply chains if lithium can be processed, transported and delivered in the quantities and forms manufacturers require.
For Trafigura, the agreement provides access to potential future output from two projects using DLE technology. For EnergyX, it provides a commercial commitment that could support further investment.
The next test will be whether the projects can secure the remaining financing, begin commercial production and deliver lithium at the quality and scale required by the battery industry.
Source:
Yahoo Finance
