Australian mining company Neometals has entered into a deal with Indian power conglomerate Manikaran Power to jointly fund a feasibility study to set up India's first lithium refinery.

The two companies have agreed to contribute their respective skills, resources and know-how towards achieving a positive outcome from the evaluation activities and to share costs equally, a Neometals company statement said.

Neometals Managing Director Chris Reed said, "Neometals and Manikaran hold a common belief in the future demand for lithium driven by the electrification of transport and storage of renewable energy."

"Given India's growth projections for electric vehicle and lithium battery manufacturing capacity, this opportunity to partner in India's first domestic lithium development and potentially realise value from downstream processing our offtake option from Mt Marion is compelling," he said.

The feasibility evaluation could take nearly 24 months and the two firms are expected to make an investment decision in the first half of 2021.

"Manikaran has significant on-the-ground presence and commercial standing in India to assist with site location, regulations, access to finance, utilities and reagents, and is part of a group of companies with broad competencies that enhance their value proposition as partners," Reed said.

Manikaran Power Limited is India's third-largest power trading and diversified renewable energy company.

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