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ASX-listed European Lithium has announced a shareholders agreement with Obeikan Group to construct and commission a large-scale hydroxide processing plant in Saudi Arabia to convert spodumene concentrate from the Wolfsberg lithium project, in Australia.

The newly established 50:50 joint venture, Arabian New Energy, will seek to have an exclusive right to purchase spodumene mined from the current resource at Wolfsberg.

The facility is expected to be developed to meet the minimum initial capacity and product specifications based on the binding long-term supply agreement with automotive group BMW.

“This is another huge milestone for the Wolfsberg project following on from the recent $15-million commitment made by BMW. We now have two very dedicated partners to ensure we fulfil our ambition of becoming the first European producers of both spodumene and hydroxide,” says executive chairperson Tony Sage.

After these key milestones have been achieved, the next steps in the development of Wolfsberg will be “a lot easier”, he adds.

“Over the next two quarters we expect to finalise the updated definitive feasibility study on the now separated projects and secure the necessary funding to commence construction.

The board of the newly formed Arabian New Energy will appoint a leading engineeringconstruction and procurement management firm to oversee the construction of the hydroxide plant.