Tesla secures deal to get lithium from Australia

Cornelia Mascio
Mag 17, 2018

It is the first lithium supply deal an Australian company has struck with the United States automaker widely regarded as being at the forefront of the electric vehicle revolution.

Western Australia firm Kidman Resources, will supply the pioneering United States auto maker with lithium hydroxide for the vehicles' batteries for three years.

Stockhead understands no other Australian miner is yet producing lithium hydroxide, which is supplied direct to electric auto battery makers.

Kidman is in a 50/50 joint venture arrangement with Chilean chemicals giant SQM to develop its Mt Holland lithium project based on the Earl Grey deposit near Southern Cross.

High demand for lithium has significantly increase since the advent of EVs as it is one of the key metals, along with cobalt and copper, in the development of the batteries needed to power the vehicles. The site is expected to start production in mid-2019, creating 400 jobs and producing about 40,000 tonnes a year (t/y) of lithium carbonate.

I expect to see more similar offtake agreements from Tesla in the near future.

Kidman said: "In addition to the agreement with Tesla, Kidman is in discussions with other strategic, globally significant parties also seeking refined lithium uptake".

"The agreement enhances Kidman's post refinery commissioning cash flow profile".

In order to secure some of the supply, Tesla has now signed a new offtake agreement with an integrated lithium miner and refiner in Australia.

The deal is for an initial three-year term on a "fixed-price take-or-pay basis" from the first product delivery, and contains two three-year term options, the company said in a statement.

Kidman says so far expressions of interest from these parties have "materially exceeded" the company's share of initial production.

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