Tesla strikes deal to buy lithium hydroxide mined in northern Mexico

On Friday, Tesla struck a deal with mining companies Bacanora Minerals Ltd and Rare Earth Minerals Plc. to purchase lithium compounds from a proposed mining site in northern Mexico.

The mine is not functional yet—the deal requires the mining companies to raise funding to construct a mine as well as processing facilities over the next two years. But as the supply contract published by Bacanora (PDF) states, the companies project that once the mine is up and running, it will be able to supply 35,000 tons of lithium compounds (namely, lithium hydroxide and lithium carbonate) per year at first, eventually expanding to 50,000 tons per year.

Tesla has agreed to purchase a minimum amount of lithium hydroxide from Bacanora Minerals and Rare Earth Minerals for five years after the mine becomes operational, with the potential to extend the agreement. In exchange, the mining companies will sell their mined materials to Tesla at below market rate, the Wall Street Journal reports.