By Ambar Warrick
Investing.com-- Shares of Australian lithium miners surged on Friday after local miner European Lithium Ltd (ASX:EUR) said it signed a supply agreement with German car maker Bayerische Motoren Werke AG (ETR:BMWG), highlighting the growing demand for the metal in automobile manufacturing.
European Lithium led gains among its peers with a 13% jump, which pushed the stock to a three-month high. Mineral Resources Ltd (ASX:MIN), the largest lithium miner in the country by market capital, jumped over 2%.
Other players, including Core Lithium Ltd (ASX:CXO), Liontown Resources Ltd (ASX:LTR) and Pilbara Minerals Ltd (ASX:PLS), jumped between 2.3% to 5.4% after the deal was announced.
European Lithium said in a press release that it had signed a memorandum of understanding with BMW to provide battery-grade lithium hydroxide to the car maker. The firm has granted BMW the first right to produce all of its lithium produced from certain resources.
The deal comes amid a widespread rush by automobile manufacturers to acquire lithium for producing batteries. Growing demand for electric vehicles has largely driven this trend.
Australian miners- which account for about half the world’s supply of lithium, have seen increasing attempts at courtship by major automobile makers, according to a Bloomberg report.
Ford Motor (NYSE:F) Co recently announced a supply agreement with Liontown for a bulk of the miner’s produce. The car maker also extended a 300 million Australian dollar (A$) loan to Liontown.
The deal follows an earlier supply agreement between Liontown and Tesla (NASDAQ:TSLA), as well as a deal with South Korean Battery maker LG Chem Ltd (KS:051915).
Growing demand for lithium has also pushed up its prices sixfold in the past year- mirroring a similar rise in the valuations of Australian lithium miners. The trend is likely to continue, as demand for electric vehicles increases.