Export credit agencies (ECAs) from Australia, South Korea and the US are considering jointly supporting a lithium mine in outback Australia, as the allies seek to build new battery metal supply chains that skirt China.

Export Finance Australia (EFA) says it sent a non-binding joint letter of support to Liontown Resources, alongside the Korea Trade Insurance Corporation (K-Sure) and US Export-Import Bank (US Exim), indicating the trio are considering extending financing to a lithium mine being built by the company in the state of Western Australia.

The ECAs are weighing up a package of up to A$300mn (US$195mn), subject to eligibility criteria and credit and risk assessments, Liontown says in a securities filing. The letter, which was accompanied by individual letters from each agency, will also help bring commercial lenders on board, according to EFA.

“As Australia’s international financing agency, EFA’s strong partnership approach with [US] Exim and K-Sure is essential to our support for the critical minerals sector,” EFA’s CEO and managing director John Hopkins says.

“The letters issued by EFA, [US] Exim and K-Sure will help Liontown to arrange its financing for the Kathleen Valley lithium project, including supporting the participation of commercial bank finance,” Hopkins adds.

A spokesperson for EFA confirmed that it is the first time the agency has penned a joint letter of support with other ECAs for a critical minerals project.

Australia is the world’s largest producer of lithium, a crucial input to batteries such as those used in electric cars, but almost all of it is exported to China and processed there.

Liontown already has offtake agreements with US carmakers Tesla and Ford, and the battery production arm of South Korea’s LG. The company expects the lithium destined for LG and Tesla to be refined in South Korea and the US respectively, but it is not yet known where the product exported to Ford will be processed.

The role of ECAs has been a strong focus in discussions on how to dent China’s dominance over battery supply chains.

Earlier this year Australia and the US struck an agreement to collaborate on critical minerals and other energy transition issues, building on ongoing discussions at the Quad level, which also includes India and Japan. EFA launched a A$2bn critical minerals facility in 2021 and ECAs in Europe are also set to play a major role helping build battery and solar supply chains there.

Liontown says the potential ECA support “reinforces a shared commitment to diversify global battery value chains” and “provides Liontown with a strong foundation as it advances all funding options to conclusion”.

Tony Ottaviano, the Sydney-listed miner’s CEO, says the agencies “are really leaning in to jointly support expanding global battery supply chains”.

So far, the mine’s development has been funded by capital raising and a A$300mn credit facility provided by Ford. In May, Ottaviano told a mining conference that at least a dozen banks had expressed interest in financing the company, the Australian Financial Review reported.

“Through our offtake partners LG Energy Solutions, Tesla and Ford, our spodumene from Kathleen Valley will be integral in supplying their rapidly expanding Li-ion battery and EV [electric vehicle] industries. I look forward to this indicated support progressing towards committed funding.”

The company also says it has launched a two-year joint feasibility study with the Sumitomo Corporation to probe the possibility of establishing a lithium supply chain between Australia and Japan.