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Ford’s Damascene conversion good news for WA miners

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Stuart McKinnonThe West Australian
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Tesla boss Elon Musk.
Camera IconTesla boss Elon Musk. Credit: Susan Walsh/AP

US auto giant Ford had an epiphany this week and it’s one that spells good news for the State’s battery metals miners and project developers.

To be fair, the realisation of the management of the historic Michigan-based company that they needed to be part of the electric vehicle revolution probably happened some time ago.

But it only manifested itself on Thursday when Ford announced plans to ramp-up its annual production run rate of EVs to 600,000 units by late 2023 and more than 2 million by the end of 2026.

The figures compare with the mere 27,140 battery-powered cars the company sold in the US last year.

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Crucially, Ford’s grand electric vision was accompanied by a raft of draft agreements with the likes of Rio Tinto (lithium), BHP (nickel) , Syrah Resources (graphite) to provide the raw materials that will go into the batteries that will power its accelerated EV ambitions.

Ford’s sudden scramble to be part of the EV revolution was highlighted when it struck a binding offtake agreement with Liontown Resources last month for lithium from its Kathleen Valley project near Leinster and agreed to $300 million in low-interest debt funding to help get it built.

Insiders say Ford was late to the bargaining table and told to put its best foot forward.

The deal that emerged represented the first time an automaker had provided direct project funding to help get a mine off the ground.

Automakers are realising that if they want to become a player of significance in the EV market, they need to lock-in the supplies of the battery materials that are required to make it happen.

Ford is by no means the first to have this awareness but it also won’t be the last.

Intriguingly the car maker predicted this week a compound annual growth rate for the EV market of more than 90 per cent to 2026, more than double current industry forecasts.

What’s playing out is a complete reinvention of the auto supply chain around batteries and electrification and carmakers are scrambling to lock in supplies of the new materials needed.

The enigmatic boss of US EV pioneer Tesla, Elon Musk, this week lamented how challenging it had been for his company to secure parts and materials.

He spoke of Tesla’s potential for a record-breaking second half of the year but also spoke of “supply chain hell”.

Junior mine developers, who have long been forced to endure exploitative financing arrangements to get their projects off the ground, are starting to enjoy the whip hand in negotiations.

Expect more deals in future and for carmakers to push further upstream to lock in supply, perhaps even to the explorer level.

There simply isn’t the supply of battery materials to cater for the wave of demand that’s on the way.

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