Announced Friday, Tesla Motors Inc (TSLA) and the “Sonora Lithium Project Partners,” a joint venture between mining company Bacanora Minerals Ltd and investment company Rare Earth Minerals Plc, have secured a conditional long-term lithium hydroxide supply agreement. Bacanora Minerals and REM have coveted rights to land in northern Mexico, where lithium is found in mineral-rich clay.
With Tesla’s “Gigafactory” (its $5 billion battery factory) under construction near Reno, Nevada, this deal gives the electric car maker an important base ingredient used in the production of the lithium-ion batteries in its vehicles. And, the agreement allows Tesla access to below-market-rate lithium I exchange for minimum purchase quantities over a five year period.
Rare Earth Minerals’ executive chairman, David Lenigas, said that "the selection of the Sonora Lithium Project as one of the lithium suppliers to the Tesla Gigafactory is a landmark transaction that will support the development and commercialization of the Sonora Lithium Project. This key supply agreement with Tesla will hopefully be the first of a number of potential lithium off-take partners for the Sonora Lithium Project as we move towards the next stages of project development."
Combined, the mine and processing facility has an initial expected capacity of 35,000 tons of lithium, with potential expansion to 50,000 tons.
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