Kidman Resources and electric vehicle manufacturer Tesla reached a breakthrough transaction from a refinery in southern Perth to a lithium hydroxide supplier, and plans to establish a cooperative relationship with SociedadQuimicaYMinera (SQM), which is listed on the New York Stock Exchange.

　　Kidman said that the binding off-take agreement reached with Alan Musk and Tesla supports its strategy of becoming a comprehensive supplier of battery-grade refined lithium.

　　This is the first such three-year offtake agreement between Tesla and an Australian company. These terms are fixed prices and taken or paid, other details are kept confidential.

　　It is estimated that Tesla will purchase about 5,000 tons of lithium hydroxide from Kidman each year, and has two three-year extension options.

　　Kidman said that in the first three years of operation of a refinery on 76 hectares of land in Kwinana, this figure was less than 25% of its initial nameplate output (44,000 tons per year).

　　The 50-50 joint venture established by Western Australia Lithium Corporation, Kidman and SQM will release a feasibility study report on the construction of the refinery later this year. Based on the cost calculations of similar projects underway in Western Australia, it is estimated that more than US$850 million will be required for investment.

　　Kidman CEO Martin Donohue praised the Tesla agreement as a landmark achievement.

　　"This further validates our strategy of becoming an ASX-listed battery-grade refined lithium manufacturer," he said. "This agreement strengthens the cash flow profile of the Kidman refinery after commissioning.

　　"We are very pleased to be able to sign our first offtake contract and continue to explore the potential for further procurement arrangements with other strategic global parties."

　　Kidman said that the interest from these groups has greatly exceeded the part of Kidman's initial nameplate production.

　　The purpose is to sign a limited number of offtake agreements while keeping a small amount of supply unrestricted.

　　SQM principal Patricio de Solminihac said at the opening ceremony of the Kwinana refinery earlier this month that the demand from electric vehicle manufacturers and the battery market will comfortably absorb the output of at least four lithium processing plants in Western Australia.

　　Chinese company Tianqi invested US$860 million in a lithium hydroxide plant with an annual output of 48,000 tons in Kwinana, Washington, and Albemarle in the U.S.-Tianqi's Talsion lithium mine partner in Greenbushes-is looking at a distance of approximately 150 kilometers. The similar-sized factory heads south in Camerton.

　　Mineral Resources Corporation is completing a pre-feasibility study on the construction of a lithium carbonate or lithium hydroxide plant with an annual output of 50,000 to 100,000 tons at the Wodgina Mine near the Port of Pilbara Headland.　　 Half of Kidman’s flagship EarlGray lithium project near the Southern Cross last year was sold to SQM last year for US$110 million (US$144.9 million). In March, the company announced that the estimated value of Earl Gray's comprehensive mineral resources has increased by 54% to 189 million tons, with a lithium oxide content of 1.5%.