Under the terms of the memorandum of understanding, the companies said they will advance their participation in the downstream lithium products market in the coming six to 12 months.

Alliance said some advantages to the 50-50 deal include access to a lithium hydroxide circuit with an existing conversion facility that is nearing completion; in fact, commissioning is expected to commence in September.

It also provides exposure to a diversified customer base, and Alliance will have its own Bald Hill lithium concentrate. Additionally, not only is there a cost benefit, it will boost the ties between Alliance and Jiangte.

Alliance officials said the company will continue to own and operate the Bald Hill mine in Western Australia, which supplies spodumene to the JV; while Jiangte will still own and operate its lithium hydroxide and lithium carbonate converter, once done, in Yichun, which is in China's Jiangxi province.

The spodumene Alliance sends in will be processed by converter, and the produced lithium hydroxide will be sold by the JV. The companies are hoping to develop long-term partnerships for battery-grade lithium hydroxide and lithium carbonate.

"Concentrate requirements of the joint venture for 2019 and 2020 are expected to represent only 20% of Bald Hill production," Alliance said. "However, once fully operational, the converter will process approximately 100,000t of spodumene per annum, capable of producing up to 15,000tpa of lithium hydroxide."

Alliance managing director Mark Calderwood explained that the JV will result in an entry into downstream production, as well as sales of lithium products, that is quick and has lower costs and lower risk.

"We see market demand for lithium hydroxide increasing. Aside from traditional industrial uses, a number of rechargeable battery manufacturers are now using lithium hydroxide in their products, and this joint venture will enable Alliance to participate in this market."

He added that it will complete the JV logistics within two months.

Jiangte chairman Jun Zhu added: "This cooperation between one of Australia's premium spodumene producers and a large Chinese lithium salts producer combines the key strengths of both parties to create a competitive participant in the lithium hydroxide products market, making greater contributions to the development of the global lithium power industry chain, while potentially enhancing the market influence and profitability of both parties."