Home New loan Ford Motor Company provides loan to Liontown Resources to develop Kathleen Valley lithium mine

Ford Motor Company provides loan to Liontown Resources to develop Kathleen Valley lithium mine


A $545 million lithium mine in Western Australia has been approved for development after its owners, ASX-listed Liontown Resources, signed a deal today with US giant Ford Motor Company to supply the battery metal and support the project with a massive loan.

The green light for the Kathleen Valley mine, 60km north of Leinster in WA’s Goldfields, follows last year’s approval for the $1.9bn Mt Holland lithium mine near Southern Cross and a refinery at Kwinana.

Today’s agreement between Perth-based Liontown and Michigan-headquartered Ford is for the annual supply of up to 150,000 dry metric tons of spodumene concentrate for five years, from 2024.

Similar transactions ensue with Elon Musk’s Tesla and South Korean battery manufacturer LG Energy Solution.

As part of the agreement, Ford will provide Liontown with a $300 million loan to fund the development of the project.

The company raised $450 million last year, so it’s well funded to cover construction costs, despite blowing out $72 million on initial estimates of $545 million.

Liontown Resources Managing Director Tony Ottaviano speaking at the 2021 Diggers and Dealers Mining Forum in Kalgoorlie-Boulder.(ABC Goldfields: Jarrod Lucas)

‘Globally significant’ lithium mine

In a statement to the ASX, Liontown chief executive Tony Ottaviano described the board’s final investment decision as just the beginning and said the “central task lies ahead” to build and commission the mine safely.

“The signing of our third and final Fundamental Offtake Agreement is a significant milestone for Liontown and the Kathleen Valley Project, with approximately 90% of Kathleen Valley’s start-up capacity now under binding long-term offtake agreements. “, did he declare.

“Our disciplined approach to our offtake strategy has enabled us to build a Tier 1 customer base, globally significant customers in the electric vehicle battery supply chain, validating Kathleen Valley’s status as an active globally important lithium.

“In addition to the drawdown, Ford’s $300 million financing facility, along with capital raised last year, means we have secured commitments for the funds needed to support the full commercial development of Kathleen Valley until to the first production.”

A map showing the location of a lithium mine in Western Australia.
A map showing the location of the proposed Kathleen Valley lithium mine, 60km north of Leinster.(Provided: Liontown Resources)

Ford’s vice president of electric vehicle industrialization, Lisa Drake, said it was an important deal for the automaker.

“Ford continues to work to source supplies deeper into the battery supply chain to meet our goals of delivering more than two million electric vehicles per year to our customers by 2026,” she said. declared.

WA lithium production on the rise

Liontown told the ASX it has already placed orders for 73% of long-lead items for the processing plant, worth an estimated $83 million.

Mining is expected to begin early next year to build up ore stockpiles ahead of the commissioning phase.

A piece of mining machinery used to crush ore.
Liontown Resources placed an order for a semi-autogenous (SAG) mill, worth $10 million, in January.(Provided: Liontown Resources)

Kathleen Valley is expected to produce around 500,000 tonnes of spodumene concentrate per year, with plans to reach 700,000 tonnes in 2029.

This will add to WA’s growing number of lithium mines in production, which already includes the Greenbushes mine in the South West, the Pilgangoora and Wodgina mines in the Pilbara, Mt Cattlin near Ravensthorpe in the Great Southern, and the Mt Marion and Bald Hill. in the fields of gold.

Mt Holland – a 50/50 joint venture between Wesfarmers and Chilean SQM – is expected to start production in the second half of 2024.