Liontown Resources pushes back first payment to debt partner Ford, cuts spodumene concentrate offtake

Liontown Resources will not deliver any lithium to car giant Ford until at least 2029 — two years later than planned — amid concerns about a slowdown in demand for electric vehicles. The Gina Rinehart-backed producer on Thursday said it had amended debt and offtake agreements with Ford, a key customer whose $300 million loan was instrumental in Liontown’s efforts to finance its Kathleen Valley mine in WA’s northern Goldfields. Under the original offtake deal, Liontown was due to supply Ford with 512,500 tonnes of spodumene concentrate for its electric vehicles from the start of 2027. That has now been slashed to just 256,250t, and there will be no deliveries in 2027 or 2028. Ford keeps the option to elect to be released from its take-or-pay obligations over all the remaining volume. It comes as Ford’s global chief executive Jim Farley last month said he “wouldn’t be surprised” if EV sales in the US fall from about 10 to 12 per cent of the market to about 5 per cent after the Trump administration’s removal of government subsidies. Liontown said the Ford changes would give it the opportunity to put further volumes into the market, including the ability to sell additional tonnes into the spot market — potentially taking advantage of any price improvements. The miner also said it had rejigged the deal to push back the first repayment under the terms of a debt facility agreement for Kathleen Valley — which started production in mid-2024 — by a year to September 30, 2026. “For Liontown, this agreement provides improved near-term balance sheet liquidity, retaining our debt facility with Ford, while giving the company strategic flexibility to sell greater volumes of spodumene concentrate via spot sales or to new strategic customers as the lithium market continues to evolve,” chief executive Tony Ottaviano said. The news comes just a week after the miner revealed it was in talks with Ford about the first payment. It has also been engaged in discussions with fellow foundation offtake partner Tesla about prices for the battery commodity. Liontown signed offtake deals for the sale of hundreds of thousands of tonnes of spodumene concentrate to its two foundational customers in 2022 when prices were at all-time highs. A brutal downturn in the price of the battery metal since then saw Liontown slump to a $193.3 million loss for the year to June 30. However, it remains optimistic its business is solid enough to withstand another year of dire prices looming in 2026. It is hopeful volatile pricing in lithium — which has been in a downturn since 2023 — is due to oversupply and the scales will eventually tip in its favour. Chairman Tim Goyder noted in the company’s annual report, last month that spodumene prices had rebounded up to $US1000/t from recent lows of around $US600/t. “Global demand for electric vehicles and stationary energy storage— particularly in China and emerging markets—continues to grow,” he said. Liontown shares closed 1.46 per cent higher on Thursday at $1.04.