European Lithium executed a shareholders agreement with Obeikan Group to develop and operate a lithium hydroxide processing plant in Saudi Arabia.

The joint venture, Arabian New Energy, will form post-registration and approval by KSA regulatory authorities. The joint venture is a 50/50 split between European Lithium and Obeikan Group.

The plant will process spodumene concentrate from European Lithium's Wolfsberg Project in Austria.

"This is another huge milestone for the Wolfsberg project following the recent $US15 million ($22.4 million) commitment by BMW. We now have two dedicated partners to ensure we become the first European producers of both spodumene and hydroxide," said Tony Sage, executive chairman of European Lithium.