Kidman will deliver 12kt of lithium hydroxide per year to LG Chem over a period of ten years.
The companies will work towards finalising a binding strategic supply agreement by 31 July.
Kidman intends to develop Mt Holland into an integrated mine-to-refinery project. Lithium produced from the Mt Holland open-cut lithium mine will be processed at a downstream refinery to produce battery-grade lithium hydroxide.
The JV is currently developing a feasibility study for the refinery, with commissioning targeted for 2021.
The company will focus on securing offtake agreements for around 75% of its share of lithium hydroxide production for the first few years of the project.
Kidman Resources CEO and managing director Martin Donohue said: “Having such a high-quality offtake counterparty provides further support for our ongoing discussions in relation to the provision of debt facilities with prospective lenders.”
Kidman’s share of lithium hydroxide production from the Mt Holland project is around 22.6kt/year.
The company signed supply agreements earlier this year with Tesla and Mitsui.
Based on an integrated pre-feasibility study (IPFS) released on 18 December, the project has an estimated service life of 47 years with a projected annual production of 45,254t of lithium hydroxide.
The project is expected to have a total capital expenditure of $737m, to be jointly funded by JV partners.