Australian lithium miner Kidman Resources has reached an agreement to supply lithium hydroxide to Tesla Motors for use in the batteries that power electric cars.

The company released a statement revealing the deal is for an initial three-year term on a "fixed-price take-or-pay basis" from the first product delivery, and contains two three-year term options.  Kidman is positioning itself as a global supplier of refined battery-grade lithium.

"In addition to the Agreement with Tesla, Kidman is in discussions with other strategic, globally significant parties also seeking refined lithium offtake," the company said .  "To date, expressions of interest from these parties have materially exceeded Kidman’s portion of initial refinery nameplate production."

Kidman's lithium development operations include the Mt. Holland lithium mine in Western Australia, the third largest deposit in the world.  The volume coming from that operation allowed it to increase production of refined lithium hydroxide.