Australian Mines has signed a binding offtake agreement with LG Energy Solution (LGES) for nickel and cobalt materials from the Sconi project in North Queensland.
The company will sell 71,000 dry metric tonnes of nickel and 7000 dry metric tonnes of cobalt to LGES under the offtake agreement in the form of mixed hydroxide precipitate.
According to Australian Mines, mixed hydroxide precipitate is a product produced at Sconi that can be used as a raw material for lithium-ion battery production.
LGES is a subsidiary of LG Chem, which is the world’s largest battery producer for the electric vehicle (EV) industry.
The offtake marks a significant milestone for Australian Mines and accounts for 100 per cent of Sconi’s production.
Australian Mines must secure financing for the construction of Sconi on or before June 30, 2022, for the offtake agreement to proceed.
“Australian Mines will now move swiftly to finalise agreements with a range of financing partners,” the company stated.
“As is customary, negotiations with financing partners will be subject to non-disclosure or confidentiality agreements.
“Australian Mines will provide updates to the ASX regarding Sconi project financing, in accordance with the company’s continuous disclosure obligations and commercial confidentiality restrictions.”
The offtake will have a six-year initial term starting at the end of 2024, with the option to extend by six months by mutual agreement.
LGES stated the offtake will allow the company to secure materials necessary to produce EV batteries amid global demand and supply shortages.
Australian Mines will use a dry stacking method to extract nickel and cobalt at Sconi, which LGES has hailed as an environmentally friendly method.
LGES president and chief executive officer Jong-hyun Kim said it is important to sign offtakes with responsible producers.
“Securing key raw materials and a responsible battery supply chain has become a critical element in gaining a greater control within the industry, as the demand for electric vehicles worldwide heightened in recent years,” Kim said.
“LGES will solidify its position as the world’s leading battery manufacturer through a steady supply of raw materials for EV batteries.”