The deal, the latest struck in Australia by the world's third largest automaker by revenues, confirms the country as a core supplier for Stellantis of materials which are key to producing batteries needed for electrification of vehicles.

It also comes at a time when Chile has announced plans to nationalise its vast industry for lithium, another metal essential in batteries, posing questions among electric vehicle (EV) manufacturers over the stability of future supplies and prices of battery materials.

Based on the agreement announced on Friday, Stellantis' binding offtake will amount to 170,000 tons of nickel sulphate and 12,000 tons of cobalt sulphate in total over an initial five-year period, representing around 40% of forecast annual production of the NiWest project.

The Italian-French group will also invest 9.2 million euros ($10.1 million) to get a 11.5% stake in Alliance Nickel. Funds from the equity purchase will be used to finalise and start the NiWest project.

Stellantis CEO Carlos Tavares said the partnership with Alliance Nickel was an important element of the group's plans, which "are built on the foundation of a guaranteed supply of key materials for our battery electric vehicles".

Stellantis, formed in 2021 through the merger of Fiat Chrysler and Peugeot maker PSA, has already reached deals for battery materials with McEwen Copper, Terrafame, Vulcan Energy, Element 25 and Controlled Thermal Resources.

The automaker and Alliance Nickel had already signed in October last year a non-binding, preliminary agreement for the supply of EV battery materials.($1 = 0.9088 euros)

(Reporting by Giulio Piovaccari; Editing by Keith Weir)