Elon Musk’s Tesla Motors has signed a three-year lithium supply deal with Australian miner Kidman Resources.
The fixed price deal for the key battery raw material will start when Kidman’s project in Western Australia commences production, the company said.
The deal is the latest sign of interest by carmakers and battery producers in securing supply of battery raw materials to help meet future demand for electric cars, especially after 2020. Lithium demand is expected to rise fourfold by 2025, according to analysts at Goldman Sachs.
Kidman is developing the Mount Holland hardrock lithium project in western Australia in a joint venture with Chile SQM, the world’s second-largest producer of the battery raw material.
It is also building a refinery to process the lithium into battery grade material, which is expected to start construction in 2021. Currently, most lithium from Australia is sent to China to be processed.
In 2015 Tesla, which uses batteries made by Panasonic, signed a similar lithium deal with Pure Energy Minerals, which is developing a project in Nevada.
SQM is one of the most experienced producers of lithium, extracting the metal from brine beneath the Atacama desert since the 1990s.
The Mount Holland project is estimated to contain 7m tonnes of lithium.
The contract with Tesla is on a “take-or-pay” basis, meaning Tesla has to take the lithium or pay a penalty.
Source: FT.com
