Published: Thu, May 17, 2018
Business | By Tara Barton

Kidman Resources secures lithium offtake deal with Tesla

Kidman Resources secures lithium offtake deal with Tesla

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.

(Adds background, details on deal) May 17 (Reuters) - Australian lithium miner Kidman Resources said on Thursday it has entered into a binding agreement to supply lithium hydroxide to electric auto maker Tesla Inc. Here's a list of ASX-listed small caps with exposure to lithium.

An Australian firm has struck a deal with Elon Musk's Tesla electric auto company.

Kidman is in a 50/50 joint venture arrangement with Chilean chemicals giant SQM to develop its Mt Holland lithium project based on the Earl Grey deposit near Southern Cross.

The refinery is expected to be commissioned in 2021, with an initial annual nameplate capacity of about 44,000 tonnes of lithium hydroxide or 37,000 tonnes of lithium carbonate.

The deal further strengthens the company's case to take part in the refinery joint venture with SQM, subject to it securing funding. Kidman said it was also in talks with other.

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"The Tesla agreement is an important milestone for Kidman".

Kidman said the agreement validated its strategy of becoming an integrated producer of battery-grade refined lithium.

In addition, Kidman is in discussions with other parties, with the company targeting leaving only a minority portion of future supply uncontracted.

The agreement is for an initial term of three years on a fixed-price take-or-pay basis from the delivery of first product, and contains two 3-year term options.

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

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