Kidman Resources secures lithium offtake deal with Tesla

Lloyd Doyle
May 17, 2018

The contract is for an initial term of three years, and includes two three-year term options.

The automaker already signed a conditional supply agreement with Pure Energy Minerals, which has claims on 9,500 acres of lithium brine in Clayton Valley - just a four-hour drive from the Tesla Gigafactory, but the mining company has yet to enter a production phase and therefore, Tesla needs to secure other sources.

Kidman said the commercial terms of the contract remain confidential, but said the deal was struck on a fixed term take-or-pay basis.

Kidman said its agreements with Tesla covered less than 25 per cent of Kidman's portion of initial nameplate production from the proposed refinery for its first three years of operation.

A short time ago, Kidman's stock price was up more than 4%.

Back in January 2017, Tesla said that it had secured lithium supply through 2017, but the real volume is expected to come in 2018 with the Model 3 production ramp-up to 5,000 cars per week and the company didn't release an update on its effort.

WAL was borne from a $US110 million ($146.3 million), 50-50 deal between Kidman and Sociedad Quimica y Minera de Chile (SQM) for the development of a refinery at the Mt Holland lithium mine near Southern Cross, WA.

It's reported to be the first deal made between Musk's firm and an Australian company.

The Kidman Resources strategy is to address the electric vehicle thematic as an integrated 1st quartile producer of refined battery-grade lithium.

"To date, expressions of interest from these parties have materially exceeded Kidman's portion of initial refinery nameplate production", the company said.

Although lithium is a finite natural resource, a study in the Journal of Power Sources found that now known world reserves are sufficient to sustain the growth in EV production and that the current reserves could power 2bn EVs, four times the number of cars now registered globally.

Demand for lithium is forecast by Deutsche Bank to grow at a 14 per cent CAGR through to 2025 driven by the growth in electric vehicles.

Other reports by Iphone Fresh

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