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Why the Orocobre share price is racing higher today

The Orocobre Limited (ASX: ORE) share price has continued its positive run on Monday.

In afternoon trade the lithium miner’s shares are up a further 2.5% to $3.74.

This latest gain means that Orocobre’s shares are now up 37.5% since this time last month.

Why is the Orocobre share price pushing higher today?

Investors have been buying Orocobre’s shares this afternoon following the release of an update on its supply contracts.

According to the release, the lithium miner has signed two contracts for the supply of battery grade lithium carbonate to top tier Chinese cathode manufacturers.

The release explains that Toyota Tsusho Corporation, as joint sales and marketing agent for production from its Olaroz Lithium Facility, has signed both contracts.

One contract is for the supply of a total 7,200 tonnes of battery grade lithium carbonate and the other contract is for supply of a total 2,880 tonnes of micronised battery grade lithium carbonate.

Both contracts will see the total tonnages delivered over a period of three years with the first shipments expected to commence in the March quarter of 2020.

Management advised that the sales price for each contract will be set as per an agreed formula and is linked to market pricing with a floor and cap.

Orocobre’s managing director and chief executive officer, Martín Pérez de Solay, appeared pleased with the contracts.

He said: “This is a welcome first step towards our previously stated commercial strategy of selling a greater proportion of our product under long term sales agreements with key customers.”

Elsewhere in the industry today, Galaxy Resources Limited (ASX: GXY) and Pilbara Minerals Ltd (ASX: PLS) shares are both pushing higher.

All three lithium miners have been strong performers in 2020 thanks to improving investor sentiment in the battery making industry. This has been driven by Tesla’s recent success and news that lithium giant SQM has had a production expansion request declined in Chile.

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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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