Kidman to supply lithium hydroxide to Tesla

  • Kidman to supply lithium hydroxide to Tesla

Kidman to supply lithium hydroxide to Tesla

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

(Adds background, details on deal) May 17 (Reuters) - Australian lithium miner Kidman Resources said on Thursday it has entered into a binding agreement to supply lithium hydroxide to electric vehicle maker Tesla Inc.

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

The refinery is expected to be commissioned in 2021, with an initial annual nameplate capacity of about 44,000 tonnes of lithium hydroxide or 37,000 tonnes of lithium carbonate.

Gigafactory 1 is now only producing at a fraction of its planned total capacity and this new deal might not even be for lithium to supply the plant.

Tesla's raw material needs, including lithium, are increasing rapidly with its battery production ramp-up at Gigafactory 1 in Nevada to support the Model 3 production and other energy storage projects.

The deal further strengthens the company's case to take part in the refinery joint venture with SQM, subject to it securing funding.

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

Kidman said the agreement validated its strategy of becoming an integrated producer of battery-grade refined lithium.

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

The initial three-year deal is based on a fixed-price, take-or-pay arrangement and has two three-year extension options.

In addition to the Agreement with Tesla, Kidman is in discussions with other strategic, globally significant parties also seeking refined lithium offtake.