Australia's Kidman Resources to supply lithium hydroxide to Tesla

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Kidman Resources can lay claim to being the first Australian lithium miner to strike a supply deal with American electric auto giant Tesla.

The Kidman Resources Ltd (ASX:KDR) share price has gained 7 cents or 3.2 per cent to $2.23 after the lithium developer announced it has entered into a binding agreement with Tesla to supply lithium hydroxide. Here's a list of ASX-listed small caps with exposure to lithium.

Stockhead understands no other Australian miner is yet producing lithium hydroxide, which is supplied direct to electric auto battery makers.

VideoA new lithium plant in Kwinana is expected to create thousands of new jobs.

Kidman is in a 50/50 joint venture arrangement with Chilean chemicals giant SQM to develop its Mt Holland lithium project based on the Earl Grey deposit near Southern Cross.

The deal further strengthens the company's case to take part in the refinery joint venture with SQM, subject to it securing funding.

Gigafactory 1 is now only producing at a fraction of its planned total capacity and this new deal might not even be for lithium to supply the plant.

Kidman maintains the right to participate in up to 50 per cent of the refinery investment and market its portion of the refined product.

I expect to see more similar offtake agreements from Tesla in the near future.

The Kidman Resources strategy is to address the electric vehicle thematic as an integrated 1st quartile producer of refined battery-grade lithium.

The agreement is for an initial term of three years on a fixed-price, take-or-pay basis from first delivery, with the option of two additional three-year terms.

"To date, expressions of interest from these parties have materially exceeded Kidman's portion of initial refinery nameplate production", the company said.