Ford bet on direct lithium extraction technology to reach a preliminary supply agreement with Australian miners

Ford announced Monday that it has signed a preliminary agreement with Australian lithium mining company Lake Resources NL, which will supply Ford with 25000 tons of lithium a year through its lithium project in Argentina, Kachi.

It is reported that the preliminary agreement reached between Ford and Lake is not legally binding, and the two sides are still in final negotiations on specific delivery schedules and other matters. If a deal is finalised, the deal will mean a big bet on new technology.

The Kachi project, located in northern Argentina near the Chilean border, is expected to cost about US $540 million and will be operational in 2024. The project, developed jointly by Lake and lithium technology startup Lilac Solutions, uses direct lithium extraction (DLE) technology. This is a relatively new technology that can extract lithium from brine and uses an area much smaller than that of open-pit mines and evaporation ponds.

In addition to Ford, automakers such as General Motors, BMW and Stellantis NV have also signed supply agreements with companies that plan to use DLE technology.

Like other companies that use DLE technology, Lilac's technology has not yet been officially commercialized, but the company is supported by Bill Gates' Breakthrough Energy Ventures and other well-known investors.

Jim Farley, Ford's chief executive, revealed in February that the company was trying to find sources of supply to ensure the supply of key raw materials for batteries such as lithium, nickel, rare earths and copper.

Jennifer Flake, a spokesman for Ford, said: "this is one of several agreements we are exploring to help Ford acquire raw materials to support our active program to accelerate the popularity of electric vehicles."

Because lithium is a key raw material for making batteries for electric cars, carmakers are scrambling to find stable sources, such as Tesla, the leader of electric cars, which struck a deal with Australian lithium miner Core Lithium last month. Core Lithium will supply up to 110000 tons of spodumene concentrate to Tesla within four years.

It is reported that the lithium mines are from the Finniss project in northern Australia, and the first batch of lithium production is expected to start in the fourth quarter of 2022 and supply of Tesla in the second half of 2023.