Australian lithium miner Liontown Resources has struck a deal to supply car manufacturing giant Ford with a crucial electric vehicle battery material and has given the green light to the development of its flagship WA project following a loan from the US automaker.

The deal with Ford will be Liontown’s third five-year agreement to supply cargoes of hard-rock lithium concentrate known as spodumene from its Kathleen Valley, WA project after agreeing to deals with Elon Musk’s Tesla and Korean battery manufacturer LG Energy Solutions earlier this year.

Ford will receive up to 150,000 dry metric tonnes of spodumene per year from Liontown once its Kathleen Valley lithium mine begins production, which is expected in 2024. The US carmaker also agreed to a $300 million debt facility with Liontown for the mine.

Liontown managing director and chief executive Tony Ottaviano said the Ford deal and a $463 million capital rise in December had allowed the board to approve the mine’s development in WA’s Goldfields region. “The signing of our third and final foundational offtake agreement is a momentous milestone for Liontown and the Kathleen Valley project, with approximately 90 per cent of Kathleen Valley’s start-up capacity now under secured long-term binding offtake agreements,” Ottaviano said.

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The company also revealed the mine’s estimated cost had been revised up from $473 million to $545 million.

Liontown shares rose by as much as 16 per cent in early trade on Wednesday, before settling at $1.12 per share at close, a climb of 5.2 per cent from Tuesday.

Ford vice president of EV Industrialisation Lisa Drake said the Liontown lithium deal helped the American carmaker support its goal to produce 2 million EVs per year by 2026.

As sales of electric cars rise across the world, automakers are racing to lock in scarce supplies of key raw materials such as nickel, cobalt and lithium that are needed to build millions of electric batteries.