As the price of lithium soars this year amid forecasts of supply shortages, aspiring clean lithium producer Lake Resources (ASX:LKE) has unveiled an offtake deal for its Kachi operation with Ford Motor Company.
Under a non-binding memorandum of understanding, Ford is offering to purchase approximately 25,000 tonnes per year of lithium chemicals from the Lake’s Kachi project in Argentina.
This collaboration with Ford is an extension of the existing offtake agreement between Lake and the Japanese Hanwa which was signed last month.
Lake noted that this was the second offtake agreement for Kachi and further reduced the project’s risks for financiers and investors.
Ford’s vice president of electric vehicle industrialization Lisa Drake said the company is “sourcing deeper into the battery supply chain.”
“This is one of many deals we are exploring to help us secure raw materials to support our aggressive acceleration of electric vehicles.”
Clean lithium supplier
With financing becoming increasingly tied to environmental, social and governance (ESG) principles, Lake Chairman Stu Crow said offtake customers are looking for new lithium projects with strict ESG adherence, like Kachi.
“Close scrutiny from customers and consumers regarding the environmental and ethical credentials of lithium production drives our focus on sustainable extraction,” he added.
Lake is proposing to develop a lithium brine and chemical operation using technology partner Lilac Solutions’ “truly disruptive” extraction technology.
Compared to traditional brine treatment, Lilac’s solution is less expensive and offers higher lithium recovery rates while protecting the local environment and water resources.
Today’s offtake agreement with Ford follows Hanwa’s agreement last month to purchase up to 25,000 tpy of lithium carbonate equivalent over 10 years from Kachi.
The companies will also establish a strategic collaboration for the development of a clean lithium supply chain to meet the environmental requirements of the electric vehicle, stationary battery and cathode/precursor manufacturing sectors and their end customers.
Crow noted that the two drawdown agreements along with indicative debt financing for 70% of Kachi’s estimated development costs provided a “supportive framework” for Lake’s Target 100 program.
This program aims to produce 100,000 tpa of high-purity lithium chemicals for global markets by 2030.