Australian Kidman Resources supplies lithium to Tesla Cars

Kidman Resources Australia said on Thursday it would provide lithium batteries to Tesla's electric car batteries, the latest in a series of deals by carmakers to ensure mineral supplies as demand for clean cars surges.

Less than two weeks after the deal, Kidman chose to develop a lithium processing plant in Kwinana, Western Australia, and its joint venture partner Sociedad Quimicay Minerade Chile (SQM).

Lithium is a key component of rechargeable batteries in electric vehicles. Projections of rising demand for Tesla X and General Motors 'Chevrolet bolts have more than tripled the price of lithium carbonate from its early 2015 level.

Australian and Canadian lithium-miners have seen their share prices rise, backed by demand for electric vehicles, in part because of stricter global standards for vehicle emissions.

"This is part of our market and we predict that it will continue to grow significantly," said James McGlew, executive director of corporate securities brokerage at Argonaut in Perth.

Kidman's shares were up 2.8 per cent on Thursday, compared with a 0.2 per cent drop for Australia as a whole. The stock was about 26 times its level in early 2016.

Tesla, led by Silicon Valley billionaire Elon Musk, has pushed the electric car market to its climax. Even if the production delay of more mass market 3 cars caused investors' concerns, buyers could not get enough luxury cars.

Panasonic, which now makes batteries for the so-called Giga-factory of Tesla in Japan and Tesla in Nevada, said last week that it might co-produce batteries with Tesla in China.

Last month, SQM executives said the global lithium industry would invest between $10 billion and $12 billion over the next decade.

Mr. Kidman, who expects the plant to go into production in 2021, said Thursday he was in talks with other "globally important" partners seeking to refine supplies of lithium.

"It's not surprising if a company like Daimler or the names of these companies are the next to sign an agreement," said Matthew Keane, leading analyst at Kidman in Argonaut.

"It's a low sovereign risk jurisdiction, and behind the good partner in SQM, you have a supportive government. This will attract many former Chinese players, as well as Chinese players, who will certainly bid. "

The agreement between Kitman and Tesla includes two three-year options. Tesla began an initial three-year transaction based on the principle of “receiving or paying at a fixed price” from the first product delivery.

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