PERTH (miningweekly.com) – ASX-listed Kidman Resources has signed a binding heads of agreement (HoA) to supply lithium hydroxide to Japan’s Mitsui & Co, over an initial two-year term.

The HoA could also be extended twice for further two-year periods, with the agreed-upon volumes supplied by Kidman gradually increasing to equate to less than 15% of the company’s share of nameplate production capacity from its planned refinery in Western Australia, of 22 600 t a year.

Kidman said on Thursday that pricing will be variable and based on the price Mitsui achieved from its customers, as well as prevailing international prices. A floor price for the duration of the initial two-year term will be in place, and for any extension terms.

“We are pleased to be announcing this agreement with Mitsui. This follows the May offtake agreement with Tesla and is further evidence of the demand for the high-quality lithium hydroxide to be produced from the Mt Holland lithium project,” said Kidman CEO and MD Martin Donohue.

“Kidman continues to progress its strategy for entering into a limited number of significant offtake agreements to develop long-term customer relationships and support its proposed debt financing, while leaving a minority portion of its future supply uncontracted.”

Kidman earlier this month revealed that an integrated mine, concentrator and refinery project would cost $601-million to develop

The integrated Mt Holland project is expected to produce spodumene concentrate from the mine and concentrator project, which would then be transported to the refinery and processed to produce some 45 254 t/y of battery grade lithium hydroxide.

The HoA with Mitsui is subject to two conditions precedent, being the finalisation of product specifications, and the lithium hydroxide produced at Mt Holland being qualified for use by Mitsui customers.

Kidman is continuing discussions for further offtake agreements, with the aim of securing further binding contracts covering some 75% of Kidman’s share of production in the early years of the project.