Ford has signed a new round of deals to lock in critical mineral supplies from Aussie miners

Ford has tapped Aussie miners to turbocharge its electric vehicle ambitions, signing new deals with BHP, Rio, Syrah and Ioneer.

Australian nickel and lithium will play a key role in Ford’s charge to sell electric versions of its F-150 Lightning pick-up truck. Picture: Al Drago/Bloomberg

Automotive giant Ford has stepped up its efforts to secure its future supply chain in the electric vehicle space, with the company’s eyes firmly set on Australian-listed partners to secure essential minerals needed for its giant factories.

The deals are part of a $US50bn plan by Ford to produce more than 2 million electric vehicles by 2026. Ford is only one among many carmakers planning a rapid expansion into the electric vehicle market, which has promoted warnings that the supply of essential battery materials such as lithium, graphite, nickel and cobalt might struggle to keep up with the automotive industry’s manufacturing plans.

Ford announced on Thursday night it had cut new early stage supply deals with a swath of Australian miners, including mining giants Rio Tinto and BHP, down to emerging producers such as Ioneer and Syrah Resources.

The carmaker already has a supply deal with ASX-listed Liontown Resources for the supply of lithium from Liontown’s under-construction Kathleen Valley project.

The slew of deals from Ford is another signal the race to lock in essential raw materials for electric vehicles and industrial batteries is stepping up a gear.

Ford is helping fund Liontown’s Australian lithium mine with a $300m debt facility, in exchange for guaranteed supply from the operation, and the car major’s support for Kathleen Valley was the last block needed by the company to approve development of the mine.

Overnight Ford also signed a binding offtake deal for 7000 tonnes a year of lithium carbonate from Ioneer’s Rhyolite Ridge lithium project in Nevada, about a third of the planned production from the integrated mine and processing facility.

Ford’s deals with Rio, BHP and Syrah are not as advanced, with the company signing memorandums of understanding with the trio for the supply of a range of materials necessary for Ford’s push into the electric vehicle market.

BHP’s Nickel West operations could supply Ford from 2025, if this week’s agreement is formalised into a binding contract.

Syrah’s UK graphite plant could supply materials for Ford’s joint venture with South Korean battery maker SK On, with a formal deal expected by the end of 2022.

Rio Tinto said it is exploring a range of potential supply deals with the automaker, including aluminium from its Canadian smelters, and lithium from Rio’s newly acquired Rincon project in Argentina.

Ford said overnight the new supply deals would help underpin its ambition to be producing 600,000 electric vehicles a year by the end of 2023.

Ford vice president Lisa Drake said the automotive giant recognised it needed to sign more deals with miners and raw material suppliers if it wanted to secure its supply chains amid fierce competition and rising prices for battery making materials.

“We will move fast in the key markets and regions where critical supplies are available, meeting with government officials, mining companies and processors, and signing MOUs and agreements that reflect Ford’s ESG expectations and underpin Ford’s plan to bring electric vehicles to millions,” she said.

Ms Drake said Ford had already firmed up agreements that secured its nickel supply until at least 2026.

And while Ford has so far only offered funding to the development of Liontown’s Kathleen Valley mine, industry sources say the company has been more than willing to offer similar arrangements to other raw material suppliers as it negotiates offtake deals.

Ms Drake confirmed on Thursday that a portion of Ford’s $US50bn electric vehicle investment plan included cash to bankroll mines and chemical processing plants.

“I can‘t disclose how much of the $50 billion, but the capital is inside of that number that we reported,” she told analysts on Thursday night.

Ioneer shares closed up 2.5c, or 5 per cent, to 52c on Friday. Syrah shares were up 2c to $1.335, with Liontown down 4c to $1.20, BHP off 4c to $36.75 and Rio up 43c to $96.26.