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"While major car producers do understand funding challenges faced by metals producers, most are wary of exposure to mining projects that come with unfamiliar risks and can take years to move from exploration to production, according to Vivas Kumar, a principal consultant at industry adviser Benchmark Mineral Intelligence and previously a member of Tesla Inc.’s battery supply chain team. What’s more likely is that the auto sector will move to add more offtake contracts, agreements to buy future production, that can help developers unlock traditional sources of project finance, he said.China’s Great Wall Motor Co. previously agreed a supply deal with lithium miner Pilbara Minerals Ltd., while Tesla, battery maker LG Chem Ltd. and others struck pacts on output from a separate planned mine and refinery project in Australia.“They provide validation of your project, that there is a blue-chip end customer to generate cash flow,” according to Kumar. Automakers are increasingly “recognizing that this is something that they could do that could actually help the junior miners get financing,” he said.
LKE Price at posting:
3.3¢ Sentiment: Buy Disclosure: Held
