Tesla and Australian firm strike lithium deal

Kidman Resources will supply electric car maker Tesla with lithium hydroxide from a refinery south of Perth.

The breakthrough deal includes plans to build in a partnership with New-York Stock Exchange-listed Sociedad Quimica Y Minera (SQM), the Australian Financial Review reports.

Kidman says the agreement with Elon Musk’s Tesla endorsed its strategy to become an integrated supplier of battery-grade refined lithium.

The three-year off-take deal is the first of its kind between Tesla and an Australian company. The terms are fixed-price and take-or-pay, with other details confidential.

Tesla expects to buy about 5000 tonnes a year of lithium hydroxide from Kidman.

Kidman says this represents less than 25% of its portion of initial nameplate production (44,000 tonnes annually) for the first three years of operation of a refinery planned at a 76-hectare site in Kwinana.

Western Australia Lithium, Kidman’s 50-50 joint venture with SQM, is due to release a feasibility study on building the refinery later this year, which the Australian Financial Reviewestimates could mean a more than $850 million investment.

Kidman chief executive Martin Donohue sees the Tesla agreement as a milestone.

“It further validates our strategy of being an ASX-listed manufacturer of battery-grade refined lithium,” he says. “The agreement enhances Kidman’s post-refinery-commissioning cash flow profile.

“We are pleased to have entered into our first off-take contract and continue to explore the potential for further off-take arrangements with other strategic, globally significant parties.”

Speaking at the unveiling of the Kwinana refinery site earlier this month, SQM head Patricio de Solminihac says demand from electric vehicle manufacturers and battery markets will comfortably soak-up the output from at least four lithium processing plants in the pipeline in WA.

Chinese company Tianqi is spending $860 million on a 48,000-tonnes-a-year lithium hydroxide plant at Kwinana in WA and US-based Albemarle – Tianqi’s partner in the Talsion lithium mine at Greenbushes – is eyeing a similar-sized facility about 150km further south at Kemerton.

Mineral Resources is finalising a pre-feasibility study on construction of a 50,000 to 100,000 tonnes annually lithium carbonate or hydroxide plant at its Wodgina mine near Port Hedland in the Pilbara.