Ford signs deals with Rio Tinto and Ioneer to boost battery metal supply

Ford Motors announced several deals on Thursday in a push to secure the critical metals needed to reach its ambitious annual electric vehicle production rate of 600,000 by 2023 and 2m by 2026.

Ford has high expectations for its EV division and expects it to deliver a compound annual growth rate (CAGR) of more than 90% through to 2026, well ahead of industry averages.

In tandem, Ford plans to cut as many as 8,000 jobs from its internal combustion engine units to boost investment into electric vehicle manufacturing.

Deals on deals

Ford and Rio Tinto (ASX: RIO) signed a non-binding memorandum of understanding (MoU) to jointly develop more sustainable and secure supply chains for battery metals.

Under the agreement, Ford plans on becoming a foundation customer for Rio Tinto’s Rincon Lithium Project in Argentina.

Rio Tinto completed the acquisition of Rincon in March for $825m. It’s a large, undeveloped lithium brine project with reserves of almost 2m tonnes of contained lithium carbonate equivalent, enough to support a mine life of 40 years.

The deal also plans to explore other essential materials for the energy transition including aluminium and copper. 

Rio Tinto 12-month price chart

On the more binding front, Ioneer (ASX: INR) signed an offtake agreement with Ford to supply 7,000 tonnes of lithium carbonate per annum over a 5-year term, starting in 2025. The company's stock rallied 11% as the market opened.

The deal represents around one third of Ioneer’s Rhyolite Ridge expected production.

Ioneer 12-month price chart

Outside of Aussie lithium miners, Ford will rely on supply from China’s CATL for lower-cost lithium iron phosphate batteries, LG Energy Solution and SK Innovation.

Ford said on Thursday that it has secured 100% of the battery materials it needs to deliver on its 2023 electric vehicle production rate.