by Amber Warrick
Investing.com– Shares in Australian lithium miners jumped on Friday after local miner European Lithium Ltd (ASX:) said it signed a supply agreement with German carmaker Bayerische Motoren Werke AG (ETR: In which the increasing demand for the metal was highlighted. Automobile manufacturing.
European Lithium took the lead among its peers with a 13% jump that pushed the stock to a three-month high. Mineral Resources Ltd (ASX:), the country’s largest lithium mining company by market cap, jumped over 2%.
Other players, including Core Lithium Ltd (ASX:), Leontown Resources Ltd (ASX:) and Pilbara Minerals Ltd (ASX:) jumped between 2.3% and 5.4% after the deal was announced.
European Lithium said in a press release that it has signed a memorandum of understanding with BMW to provide battery-grade lithium hydroxide to the carmaker. The firm has given BMW the first right to produce all of its lithium produced from certain resources.
The deal comes amid widespread rush by automobile manufacturers to obtain lithium for battery production. The increasing demand for electric vehicles has driven this trend to a great extent.
Australian miners—which account for nearly half of the world’s supply of lithium—have seen an increase in courtship attempts by major automobile manufacturers, according to one.
Ford Motor (NYSE:) Company recently announced a supply agreement with Liontown for a large portion of Minor’s product. The carmaker also extended a loan of 300 million Australian dollars (A$) to Leontown.
The deal follows an earlier supply agreement between Leontown and Tesla (NASDAQ:), as well as a deal with South Korean battery maker LG Chem Ltd (KS: ).
Rising demand for lithium has also driven its prices up six-fold over the past year – reflecting a similar increase in valuations of Australian lithium miners. This trend is likely to continue, as demand for electric vehicles grows.