Kidman Resources and Tesla sign Breakthrough Lithium Acquisition Agreement

Kidman Resources and electric car manufacturer Tesla have entered into a groundbreaking deal with lithium hydroxide suppliers from a refinery in southern Perth, plans to establish a partnership with Sociedad QuimicaY Minera (SQM), listed on the New York Stock Exchange.

Kidman said that the binding offtake agreement with Allen Maskectra supports its strategy of becoming a battery -grade refined lithium integrated supplier.

This three-year offtake agreement between Tesla and Australian companies is the first. These terms are fixed prices and are taken or paid and other details are kept confidential.

Tesla is expected to purchase approximately 5,000 tons of lithium hydroxide from Kidman each year and has two three-year extension options.

Kidman said that in the first three years of operation of a refinery in Kwinana's 76 hectares, this figure was less than 25% of its initial nameplate production (44,000 tons per year).

The 50-50 joint venture between Western Australian Lithium and Kidman and SQM will release a feasibility study on refinery construction later this year. Based on the costing of similar projects underway in Western Australia, an investment of more than $850 million is expected.

Kidman CEO Martin Donohue praised the Tesla agreement as a milestone.

“This further validates our strategy to become a battery-grade refined lithium manufacturer listed on ASX,” he said. “The agreement strengthens the cash flow profile of the Kidman refinery after commissioning.

“We are pleased to be able to sign our first offtake contract and continue to explore the potential of further procurement arrangements with other strategic global players.”

Kidman said that interest from these groups has greatly exceeded the part of Kidman's initial nameplate.

The aim is to enter into a limited number of off-take agreements while retaining a limited amount of supply.

Speaking at the unveiling ceremony of the Kwinana refinery earlier this month, SQM head Patriciode Solminihac said that demand from electric vehicle manufacturers and the battery market will comfortably absorb the output of at least four lithium processing plants in Western Australia.

Chinese company Tianqi invested 860 million US dollars in a 48,000-ton lithium hydroxide plant in Kwinana, Washington, and Albemarle--Tianqi's partner in the Talsion lithium mine in Greenbushes, USA - is paying attention to a distance of about 150 kilometers, a similarly sized factory heading south to Cameron.

The Mineral Resources Company is completing a pre-feasibility study on the construction of a lithium carbonate or lithium hydroxide plant with an annual production capacity of 50,000 to 100,000 tons at the Wodgina mine near Pilbara Port Hedland.

Kidman sold it to SQM last year for $110 million ($144.9 million) in half of the flagship EarlGray lithium project near Southern Cross. In March, the company announced that the estimated value of Piaget's comprehensive mineral resources has increased by 54% to 189 million tons and lithium oxide content of 1.5%.

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