The Ford Motor Company revolutionised the auto industry with the launch of the Model T over a century ago, now it’s tapped ASX-listed lithium developer Lake Resources to power its drive into the new century with a lithium supply deal for its electric vehicle range.

Lake Resources (ASX:LKE) has secured an offtake proposal with global motoring giant Ford with a non-binding MoU for approximately 25,000tpa of lithium from its Kachi project in Argentina.

It means all of Kachi’s planned 50,000tpa capacity will be covered by offtake proposals after the announcement last month of a 25,000tpa supply deal with Japan’s Hanwa Co., although negotiations are continuing with both parties as both are non binding MoU’s.

“Both Lake and Ford see this as an opportunity for a potential long-term agreement with the ability to scale up environmentally responsible production and participate in Lake’s other projects to ensure high-quality lithium products are available to Ford,” Lake managing director Steve Promnitz said.

“This MoU with Ford supports Lake’s strategy to be a key independent supplier into global lithium supply chains and ensure the security of supply to customers.”

Clean lithium in short supply

Lake’s Kachi project is distinct from other Argentine brine developments in that it plans to use direct lithium extraction technology to produce lithium chemicals in a cleaner, less water intensive process.

It’s in good company – Rio Tinto is pursuing a similar processing technique for its Rincon lithium brine.

Alongside Rio, Lake can make a genuine claim to early mover status, and its clean lithium product is sure to find appeal with customers as negotiations continue. Reuters made this very clear in a recent article.

Lithium of all kinds is in short supply, with chemical prices rising to over US$75,000/t in the last month in Asia. ESG friendly supply is even tougher to find, making products like Lake’s highly sought after for carmakers.

Lake chairman Stu Crow said project financing was increasingly tied to ESG credentials, with financiers, investors, offtakers and consumers demanding new projects have strict ESG standards.

“Increasing customer and consumer scrutiny around lithium production’s environmental and ethical credentials drives our focus on sustainable extraction,” Crow said.

“Lake Resources is committed to integrating sustainable development practices throughout our operations, minimising our environmental footprint, and contributing to a clean energy future.

“This MoU with Ford follows the Hanwa MoU.

“Together with the UK and Canada Export Credit Agencies’ indicative provision of debt finance for around 70 percent of the Kachi project’s capital requirements, this provides a framework of support for Lake’s TARGET 100 Program, which has the goal of producing annually 100,000 tonnes of high purity lithium chemical to market by 2030.”

Ford delving into battery supply chain

For Lake the deal is an important step. Not only is it partnering with a global top five motor company, but offtake deals are important to de-risk new projects like Kachi for funders and investors.

For Ford, it ensures raw material supply to prevent the carmaker being caught short at the end of the supply chain.

“As we’ve shared, Ford is sourcing deeper into the battery supply chain,” said Lisa Drake, Ford’s vice president of EV industrialization.

“This is one of several agreements we’re exploring to help us secure raw materials to support our aggressive EV acceleration.”

 

 

 

This article was developed in collaboration with Lake Resources, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.