Band Ernest Scheyder

July 31 (Reuters)A battery joint venture of Toyota Motor Corp 7203.T and Panasonic Corp. 6752.T will purchase lithium from ioneer ltd INR.AX Rhyolite Ridge mining project and using the metal to build batteries for electric vehicles in the United States.

The binding supply agreement, announced on Sunday, is the second in less than a month for ioneer and a strong vote of confidence in a project that is racing to be the first new US source of battery metal in decades.

Under the terms of the agreement, ioneer will supply 4,000 tonnes of lithium carbonate per year for five years to Prime Planet Energy & Solutions (PPES), which was formed by Toyota and Panasonic in 2020 to better compete with battery market leader Contemporary Amperex Technology Co Ltd (CATL) 300750.SZ.

Supplies are expected to begin in 2025, a timeline that depends in part on securing funding and allowing.

The agreement includes a commitment from PPES that ioneer’s lithium will be used to manufacture EV battery parts in the United States for the US EV market. PPES, which is based in Japan, reportedly considered building a battery factory in western North Carolina.

“The intent of this agreement is for this lithium to be used in the United States,” James Calaway, executive chairman of ioneer, told Reuters.

A proposed extension of the U.S. Electric Vehicle Tax Credit would require lithium and other minerals for electric vehicles to be purchased domestically or from allies as early as next year. The potential change, which is being debated in Congress, has shed light on the nascent U.S. development plans of battery and auto makers.

“Having an agreement with ioneer provides PPES with a first step in securing a US lithium supply,” said PPES President Hiroaki Koda, who added that he has “confidence in ioneer’s technology.” .

The amount of lithium that Ioneer will supply to PPES is enough to make batteries for about 150,000 electric vehicles per year, although this figure may vary depending on design and other factors.

Australia-based Ioneer aims to produce about 21,000 tonnes of lithium per year in Nevada from 2025. It has signed a supply agreement with Ford engine Co FN in mid-July and last year with South Korea Ecopro Co 086520.KQ.

The Rhyolite Ridge project has been pushed back by some conservationists who fear it could harm a rare flower known as Tiehm’s buckwheat, although ioneer said he believes he can extract the lithium safely while protecting the plant.

“We figured out how to build the mine without touching Tiehm buckwheat,” Calaway said.

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(Reporting by Ernest Scheyder in Houston; Editing by Daniel Wallis)

(([email protected]; Twitter: @ErnestScheyder; +1-713-210-8512; Reuters Messaging: [email protected]))

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