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Ford strikes series of North-America-based new deals to secure EV critical minerals, fueled by Inflation Reduction Act

Automaker Ford is gearing up to boost its electric vehicle production to 2 million cars over the next two and half years. And this will need a secure supply of critical minerals.

Ford has announced four new new deals across the US and Canada:

Albemarle Corp will supply Ford with more than 100,000 metric tons of battery-grade lithium hydroxide, to power 3 million EV batteries. Starting in 2026, the five year supply agreement will be from either domestically produced or originating in a country with Free Trade Agreement with the US
Compass Minerals will supply up to 40% of it’s battery-grade lithium carbonate to Ford for 5 years, from it’s lithium brine development in Utah
Nemaska Lithium, based in Québec and Livent, will supply up to 13,000 tons of lithium hydroxide per year for 11 years to Ford
EnergySource Minerals will supply lithium hydroxide produced at its Imperial Valley, California site which is expected to be operational in 2025
Ford also announced a new long-term lithium supply deal with Chile’s SQM

The agreements come as the auto giant plans to produce 600,000 EVs by the end of 2023 and take advantage of US government tax credits, fueled by the Inflation Reduction Act.

“Onshoring the processing is going to be the most important controller of cost and also politics. Eighty percent of the processing for nickel and lithium are being done in China and we need to localize that.”
— Jim Farley, Ford chief executive officer, told Bloomberg

By 2030, Ford expects annual energy demand for its vehicles will be up to 140 GWh annually in North America and up to 240 GWh globally. They are working to build out 240GWh of new battery cell capacity is underway from 5 gigafactories across the USA.

“This is a big moment for Ford. Deals with developers are important, but ones active producers are irreplaceable. This isn’t a flash in the pan. This is the bedrock for an entire new lithium ion economy in the USA. The Inflation Reduction Act has been an incredible force for our industry. It has completely shifted the economics of the game and has resulted in industry collaborating to build an entire industry from scratch in North America.”
— Simon Moores, founder and CEO of the UK mining data firm Benchmark Mineral Intelligence, wrote on the deals

We have three recommended analyses for investors:

US metals demand set to soar on Biden’s big bets on clean economy

Stellar electric vehicle sales keep focus on tight metal markets

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