Tesla has closed a deal with Australia’s Kidman Resources for lithium on an initial three-year term and on a “fixed-price take-or-pay basis” from the first product delivery. Kidman recently chose a site to develop a lithium processing plant in Kwinana, Western Australia, with its joint venture partner Sociedad Quimica y Minera de Chile (SQM) to produce lithium hydroxide, a key ingredient in Tesla and Panasonic NCA cathode materials.
Kidman, which expects the processing plant to come on line in 2021, said it was in talks with other “globally significant” parties seeking supplies of refined lithium.
Roskill view: “More and more deals are being closed in the battery raw materials space between miners and downstream manufacturers from the battery and automotive sector.
“While most deals only involve Asian downstream manufacturers, Tesla was the first North American company to officially secure battery raw materials after it signed a similar deal back in 2015 with Canada’s Pure Energy Minerals. Tesla’s production target of 1 million electric cars by 2020 implies a lithium requirement of around 50,000 t of lithium carbonate.
“Miners integrating operations to produce lithium hydroxide are targeting high-nickel content batteries such as NCM 811 and Panasonic’s NCA. Despite its higher price, lithium hydroxide offers higher performance in lithium-ion batteries, especially given the new regulatory requirements in countries such as China where range and energy density is strictly controlled. In 2017 around 30% of the lithium used in automotive lithium-ion batteries was lithium hydroxide and this proportion is expected to increase within the next decade.”
SQM is investing $110 million to earn 50% equity in the Mt Holland JV. The picture shows SQM facilities in Chile.
John Meyer of SP Angel notes: “Automakers and battery manufacturers are targeting sources of lithium, cobalt and other raw battery materials, with BWM AG forecasting the requirement for crucial metals surging 10-fold by 2025.”
One Australian energy metals analyst notes “the fact that this is a deal for product that won’t be available for three years shows the urgency in the sector. What we are seeing is that automakers are increasingly willing to go all the way upstream, even to the individual mine, to secure supply”.
