Why Shares of Piedmont Lithium Are Powering Higher This Week

What happened

While the S&P 500 has been flat this week, shares of Piedmont Lithium (PLL +0.00%) have been charging notably higher. The company announced that it has amended its agreement with Tesla, and the development has clearly electrified the bulls' excitement.

As of 10:31 a.m. ET, shares of Piedmont Lithium are up 13.8% since the end of last Friday's trading session, according to data from S&P Global Market Intelligence.

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NASDAQ: PLL

Piedmont Lithium

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So what

Wasting no time, Piedmont provided investors with something to celebrate on the first day of trading in 2023. On Tuesday, Piedmont reported that it has updated the terms of its agreement with Tesla regarding the delivery of spodumene concentrate, a mineral processed in the production of lithium.

According to the new agreement -- which is binding for three years and includes an option to renew for another three years -- Piedmont will supply Tesla with 125,000 metric tons of spodumene concentrate beginning in the second half of 2023 through the end of 2025.

Piedmont will source the mineral from its North American Lithium asset located in Quebec. Operations at North American Lithium had been suspended, but the company expects to restart operations in the first half of 2023. The first commercial shipments, consequently, are expected to begin in Q3 2023. 

Lauding the new agreement, Keith Phillips, Piedmont's CEO, stated in a press release:

The electric vehicle and critical battery materials landscape has changed significantly since 2020, and this agreement reflects the importance of -- and growing demand for -- a North American lithium supply chain.

Now what

Undeniably, Piedmont's new agreement with Tesla is a positive for the company, but prospective lithium investors shouldn't interpret the news as a singular reason to pick up shares. Instead, investors should monitor closely the company's development of other lithium projects in Ghana, Tennessee, and North Carolina -- important projects for the company's goal to become an important player in the lithium industry.