Musk snaps up WA lithium

The West Australian - - NEWS - Stu­art McKin­non

WA lithium will help drive US ty­coon Elon Musk’s grand am­bi­tion of mak­ing elec­tric ve­hi­cles avail­able and af­ford­able to av­er­age car buy­ers across the globe.

Shares in Kid­man Re­sources surged to near all-time highs yes­ter­day af­ter the as­pir­ing miner an­nounced a bind­ing deal with Mr Musk’s com­pany Tesla to sup­ply the lithium hy­drox­ide for use in the bat­ter­ies that power its elec­tric cars.

Other WA lithium pro­duc­ers have signed off­take deals with car mak­ers and bat­tery pro­duc­ers in Asia but the Kid­man deal rep­re­sents the first for an Aus­tralian com­pany with the US car maker re­garded as the pi­o­neer of the elec­tric car revo­lu­tion.

The ini­tial three-year deal is based on a fixed-price, take-or­pay ar­range­ment and has two three-year ex­ten­sion op­tions. It is un­der­stood Tesla has in­sisted on strict con­fi­den­tial­ity over the deal’s other com­mer­cial terms.

Kid­man is in a 50/50 joint ven­ture with Chilean chem­i­cals gi­ant SQM to de­velop its Mt Holland lithium project based on the rich, 189-mil­lion tonne Earl Grey de­posit near South­ern Cross.

The com­pany also has an op­tion to join SQM in the de­vel­op­ment of a lithium hy­drox­ide/ lithium car­bon­ate plant for which the two par­ties this month iden­ti­fied a site in Kwinana.

Kid­man said the Tesla deal cov­ered less than 25 per cent of its por­tion of pro­duc­tion from the proposed re­fin­ery for the first three years of its op­er­a­tion.

Bat­tery mak­ers and car mak­ers are rush­ing to lock in the sup­ply of lithium and other bat­tery min­er­als ahead of what is ex­pected to be a global surge in elec­tric ve­hi­cle pro­duc­tion and de­mand over the next 20 years.

Kid­man man­ag­ing di­rec­tor Martin Dono­hue said the agree­ment was a mile­stone for the com­pany that val­i­dated its strat­egy of be­com­ing an in­te­grated pro­ducer of bat­tery-grade lithium.

“We are pleased to have en­tered into our first off­take con­tract and con­tinue to explore the po­ten­tial for fur­ther off­take ar­range­ments with other glob­ally sig­nif­i­cant par­ties,” he said.

The As­so­ci­a­tion of Min­ing and Ex­plo­ration Com­pa­nies this week called on State and Fed­eral gov­ern­ments to take lead roles in help­ing to de­velop WA as a global hub for the down­stream pro­cess­ing of bat­tery min­er­als.

China’s Tianqi Lithium is al­ready spend­ing $860 mil­lion to build a plant at Kwinana ca­pa­ble of pro­duc­ing 48,000tpa of lithium hy­drox­ide.

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