Ford delays Liontown deal

Liontown Resources (ASX: LTR) will not be delivering lithium from its Kathleen Valley operations in WA to the Ford Motor Company until at least 2029, if at all.

Under the original terms of the offtake agreement, Liontown was to deliver 512,500dmt to Ford from January 1, 2027, onwards. The total has now been halved to 256,250dmt with initial delivery pushed back by at least two years.

The reduction in lithium volume and delay in delivery are being attributed to slow electric vehicle (EV) uptake across the US.

Liontown will receive a yearlong repayment reprieve for its $300m loan and supply deal with Ford now scheduled to commence September 30, 2026.

All other conditions, including interest margin, term and security, remain unchanged and Ford has the option to elect to be released from its take-or-pay obligations over all the remaining volume.

Liontown says the offtake agreement changes afford the company the opportunity to place further volumes in the market, including giving it the ability to sell additional tonnes into the spot market to encourage transparent pricing and pursue new strategic partnerships.

Liontown managing director and chief executive Tony Ottaviano says the original Ford agreement in 2022 was instrumental in financing and developing Kathleen Valley.

“With production now underway, these amendments mark the next phase of our relationship,” he said.

“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.”

Prior to this, Liontown recently revised its pricing mechanism in its offtake agreement with Tesla and suffered a $193m loss for Kathleen Valley in its first year amidst a volatile global lithium market.