Elevra Locks In Long-Term Spodumene Supply Deal with Mangrove Lithium

Long-Term Supply Contract Secures Domestic Lithium Feedstock

Elevra Lithium Limited (ASX:ELV; NASDAQ:ELVR) has taken a significant step in cementing its role in North America’s lithium supply chain by signing a binding spodumene concentrate supply agreement with Mangrove Lithium. This deal, following a previously announced non-binding Memorandum of Understanding, commits Elevra to supplying spodumene concentrate from its North American Lithium (NAL) operation in Québec to Mangrove’s planned 20,000 tonne per annum lithium carbonate equivalent (LCE) conversion facility in Eastern Canada.

The contract spans an initial seven-year term with an option to renew for another seven years, extending the original MoU’s five-year horizon. Annual contracted volumes start at 122,000 dry metric tonnes (dmt) in the first year, increasing to 144,000 dmt from the second year onwards, on a take-or-pay basis. Mangrove also holds the right to boost volumes by up to 20% annually, subject to capacity and Elevra’s consent.

Pricing Structure Protects Margins While Capturing Upside

Elevra’s CEO Lucas Dow highlighted the financial appeal of the deal, noting the inclusion of a price floor expected to sit above NAL’s production costs. This downside protection ensures a baseline margin while leaving the upside uncapped, a notable improvement from the MoU’s pricing terms. The price will be linked to market-based spodumene concentrate prices and adjusted for product grade, reflecting industry norms.

Importantly, the agreement enables Elevra to avoid costly seaborne freight by supplying a geographically proximate customer, which should further bolster margins. Mangrove’s facility, still subject to a positive Final Investment Decision (FID) and financing, aims to integrate spodumene processing and lithium refining using proprietary electrochemical technology, advancing a domestic Canadian lithium supply chain.

Government Backing Signals Strategic Importance

Both companies have secured strategic support from the Canada Growth Fund (CGF), a C$15 billion investment vehicle focused on critical Canadian projects. Mangrove previously attracted up to US$85 million in structured financing led by CGF, while Elevra has received convertible note funding from the same source to advance the NAL Brownfield Expansion. This shared backing underscores the Canadian government’s commitment to fostering a secure, integrated mine-to-chemicals lithium ecosystem.

Mangrove CEO Saad Dara emphasised the deal’s role in strengthening North America’s energy security and battery materials competitiveness by reducing reliance on overseas processing. The partnership is positioned as a cornerstone for building critical minerals infrastructure and supporting the continent’s growing battery manufacturing ambitions.

Execution Hinges on Financing and Project Milestones

The agreement’s effectiveness depends on Mangrove securing necessary project financing, achieving a positive FID by the end of 2028, and reaching sustained commercial operations at no less than 50% of nameplate capacity within three years thereafter. These conditions introduce execution risk, with the timing and scale of Mangrove’s facility development remaining key uncertainties.

For Elevra, this deal complements recent milestones including a record monthly spodumene concentrate production and a substantial financing package supporting the NAL expansion, which is expected to increase output by up to 20% and reduce unit costs. The supply agreement thus fits into a broader strategy to capitalise on North American lithium demand and government incentives.