Rock Tech concludes lithium hydroxide supply deal with Mercedes Benz for EV ramp up
Rock Tech Lithium Inc (TSX-V: RCK) (OTCQX: RCKTF) (FWB: RJIB) (WKN: A1XF0V) ("Rock Tech" or the "Company") is pleased to announce that it has entered into a definitive supply agreement (the "Supply Agreement") with Mercedes-Benz AG ("Mercedes-Benz") providing for the supply of an average of 10,000 tonnes of battery-grade lithium hydroxide per year. Over a five-year term of the agreement and an initial ramp-up period, the agreement represents a roughly total estimated sales volume of approximately C$2 billion or €1.5 billion and over 40 percent of the expected annual production from Rock Tech's planned converter capacity in Guben, Germany. The estimated sales volume is based on moderate market forecasts and assessments.
In furtherance of the strategic partnership announced by Rock Tech and Mercedes-Benz on August 23, 2022, the parties have signed the definitive Supply Agreement providing for the supply of an average of 10,000 tonnes of battery-grade lithium hydroxide per year. Based on moderate market forecasts and assessments the total sales volume is estimated to approximately C$2 billion or €1.5 billion over the five-year term and an initial ramp-up period of the Supply Agreement.
The Supply Agreement provides for a five-year term, commencing with a preceded qualification period in 2026 in which quality and sustainability benchmarks have to be met. Afterwards, it is anticipated that Rock Tech will deliver an average of 10,000 tonnes of refined lithium hydroxide to Mercedes-Benz' supply chain annually under the Supply Agreement from Rock Tech's first lithium converter in Germany, which would represent more than 40 per cent of the planned converter capacity.
"Signing the Supply Agreement marks a significant milestone of our offtake strategy, and I am honored that Mercedes-Benz demonstrates trust in Rock Tech as a new but reliable player in a diversified European battery supply chain," commented Rock Tech's Chief Executive Officer, Markus Bruegmann at the signing event in Sindelfingen, Germany. "We are well aware of the significance of this relationship to both parties. We intend to focus our efforts on providing lithium hydroxide that will help to bring Mercedes-Benz' electric mobility ambitions into action. This arrangement is a major step forward in our plans to directly contribute to clean mobility."
"This significant amount of lithium sourced directly from Rock Tech will help Mercedes-Benz to advance localization of European production of state-of-the art battery cells. The on average 10,000 tonnes of lithium hydroxide per annum will play a key role in securing the lithium supply for our battery production in Europe, to help achieve our ambitious electrification goals," said Markus Schäfer, Member of the Board of Management of Mercedes-Benz Group AG, Chief Technology Officer, responsible for Research & Development and Procurement.
Pursuant to the Supply Agreement, Rock Tech is expected to supply Mercedes-Benz supply chain with high-quality lithium hydroxide needed to rapidly scale up production of electric vehicles (EVs). The annual volume of lithium hydroxide to be delivered pursuant to the Supply Agreement will be sufficient to equip approximately 150,000 Mercedes-Benz electric cars with premium high-performance batteries. EV mobility is a key goal in achieving carbon neutrality, an objective shared by both companies, including Rock Tech's converter production. In support of this objective, the Supply Agreement provides that the parties will cooperate in creating a roadmap to achieving CO2 neutral production of lithium hydroxide by the end of 2030. Additionally, it also requires that all lithium hydroxide supplied by Rock Tech shall be sourced from mining sites audited by the Initiative for Responsible Mining Assurances ("IRMA").
On behalf of the Board of Directors,