Musk snaps up WA lithium
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.