ASX-listed Kidman Resources this morning announced a binding deal to supply refined lithium hydroxide to Tesla, billionaire Elon Musk’s electric vehicle company.
The contract is for an initial term of three years, and includes two three-year term options.
Kidman said the commercial terms of the contract remain confidential, but said the deal was struck on a fixed term take-or-pay basis.
That means if Tesla doesn’t purchase the products it will be liable to pay Kidman penalty costs.
A short time ago, Kidman’s stock price was up more than 4%. Shares in the company have climbed steadily from a value of around 55 cents in July last year.
Kidman’s lithium development operations include the Mt Holland lithium mine in Western Australia — a 50/50 joint venture with Chilean company SQM (Sociedad Quimica y Minera de Chile). The Mount Holland lithium deposit is the third largest in the world.
Kidman said the nature of the Mt Holland deposit allowed it to increase production of refined lithium hydroxide.
The company is placing a strategic focus on the growing market for electric vehicles, positioning itself as a key supplier of refined battery-grade lithium.
“In addition to the Agreement with Tesla, Kidman is in discussions with other strategic, globally significant parties also seeking refined lithium offtake,” Kidman said.
“To date, expressions of interest from these parties have materially exceeded Kidman’s portion of initial refinery nameplate production.”
In a report to investors this month, Kidman said the electric vehicle industry will be the key driver of demand for lithium products through to 2025.
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