Australia-listed Galan Lithium on Tuesday announced an offtake prepayment memorandum of understanding with China’s Chengdu Chemphys Chemical Industry.

The company also confirmed that the previously announced agreement with commodities major Glencore would no longer proceed.

Upon execution of definitive agreements, Galan will supply Chemphys a total of 23 000 t of lithium carbonate-equivalent (LCE) over the first five years of Phase 1 production from the Hombre Muerto West (HMW) project, in Argentina.

Chemphys will provide Galan with a $40-million offtake prepayment facility to facilitate the continued development of Phase 1 of the HMW project.

“The high-grade, low-impurity lithium chloride samples Galan has been producing from the HMW pilot plant have been very well received by lithium converters leading to this agreement with Chemphys. Chemphys is a leader in processing lithium products in China and is a trusted partner to some of the world's largest battery manufacturers,” said MD JP Vargas de la Vega.

Regarding the Glencore agreement, Galan stated that it had not received both an offtake and offtake and financing prepayment facility proposal from the major, as announced in November last year. Under that facility, Glencore would have provided or facilitated a prepayment facility for $70-million to $100-million and would have supplied 100% of HMW’s Stage 1 production of 5 400 t of LCE.