General Motors Corporation partners with Lithium Americas Corp committing $625 million in cash and credit toward the development of a lithium carbonate mining operation at the Thacker Pass site in Humboldt County, Nevada, with Lithium Americas Corp. The source stated that this agreement marks a strategic departure for GM from its earlier consideration to invest directly in the Canadian mining company.
Lithium is a key raw material used in the manufacture of electric vehicle (EV) batteries and part of the company’s step toward increasing its all-electric vehicle offerings as incentives to produce EVs garner more federal regulations. According to Jeff Morrison, GM’s Senior Vice President of Global Purchasing and Supply Chain: “We believe that sourcing lithium domestically supports the control of battery cell costs and directly delivers value to customers and investors while creating jobs in America.”.
The agreement provides that GM will retain a 38% equity stake in the Thacker Pass project. The investment arrangement consisted, inter alia, of an up-front cash contribution of $330 million on closing, alongside a further $100 million that would be available at the “final investment decision” for a later stage of the project, and a $195 million letter of credit facility.
Lithium Americas CEO Jonathan Evans said the new partnership deepens a deal to strengthen GM’s fully domestic supply chain of lithium, following an investment by GM of $320 million in Lithium Americas, which it awarded about 15 million common shares.
Beyond this, the announcement has also been positive on the company’s stock, with a 23% increase in the share price of a single day, indicating that investors are supportive of the partnership and the promising potential it may offer to enhance lithium production in the United States.
While both companies continue pushing ahead with their plans, the Thacker Pass project will be an interesting opportunity to meet the growing demand for materials critical to powering the new EV batteries while supporting domestic manufacturing initiatives.
