Sociedad Química y Minera de Chile S.A. (SQM), an integrated producer and distributor of lithium, iodine, specialty plant nutrients, potassium-related fertilizers and industrial chemicals, has formed a joint venture with Australia’s Kidman Resources Ltd. to consolidate three complementary lithium production plants worldwide: the Salar de Atacama in Chile, the Salar de Caucharí in Argentina and the Mount Holland Spodumene deposit in Australia.

Kidman Resources, a precious and base metals company holds the Tier-1 Globally significant Earl Grey Lithium Deposit, as well as the 1 Moz Mt. Holland Gold Project located centrally within the Forrestania Greenstone Belt near Southern Cross of Western Australia.

The joint venture announcement follows SQM’s acquisition of 50% of Kidman’s interest in the Mt. Holland lithium project. The offer is subject to SQM and Kidman agreeing on formal documentation, reflecting the commercial terms outlined in the offer, on or before September 30, 2017.

SQM will pay USD30 million in cash for Kidman’s 50% interest in the project. Additionally, SQM will contribute USD80 million to fund part of the project development costs. As part of this expenditure contribution, following the execution of the formal documentation, SQM will provide a USD21.5 million convertible loan to Kidman, to advance the project while outstanding conditions required for implementation of the joint venture are satisfied.

The joint venture will develop a spodumene mine and concentration plant and a refinery plant. The initial production target would be approximately 40,000 metric tonnes per year of LCE in 2021. Kidman will retain the exclusive right to exploit gold from within the project area.

“At present, global demand is about 200,000 tonnes of Lithium Carbonate Equivalent (LCE) per year and growing at rates of nearly 14% per year. We believe it is highly probable that worldwide demand will exceed 500,000 tonnes by 2025. The use of lithium batteries in the automotive industry marks a trend that will revolutionise global demand in the coming years,” said Patricio de Solminihac, SQM’s CEO.

“Our experience as a leader in the industry for more than 20 years puts us in a privileged position to capture the opportunities that arise in the lithium market,” he said. “The Salar de Atacama, Caucharí, and Mount Holland far exceed our objectives: they are high quality deposits with great potential for future growth, which will allow us to continue being operators with low total production costs in all of our plants.”