Lithium Americas To Receive $650 Million Investment From General Motors

Mining investors this morning might have received the news required to pump some life into the sector. General Motors (NYSE: GM) and Lithium Americas (TSX: LAC) have jointly announced that they will work together to develop the Thacker Pass mine in Nevada, which is currently viewed as the third largest lithium deposit globally.

The deal will see General Motors invest a whopping $650 million in Lithium Americas, which amounts to the largest investment by an auto manufacturer into raw materials for batteries. The investment is to occur in two tranches, with the first tranche to be held in escrow pending the outcome of the Record of Decision ruling from the US District Court, and certain other undisclosed conditions.

READ: Lithium Americas: Federal Ruling On Thacker Pass Expected As Early As March

Once conditions are met, General Motors will become a shareholder in Lithium Americas. The deadline for the first tranche to be met is the end of 2023. The second tranche will be made once Lithium Americas completes the separation of its US and Argentina operations into different companies, and is contingent on Lithium Americas sourcing the funding required to support the development of Thacker Pass.

READ: Lithium Americas To Split Into Two Firms To Unlock Shareholder Value

In exchange for the investment, GM will obtain exclusive access to lithium carbonate produced under phase one production at the mine, and will have the right of first offer on phase two production. The first phase of production is currently estimated to amount to 30,000 tonnes per annum of lithium carbonate, with that figure to double under phase two. Lithium Americas has said that they expect this production to support the production of up to 1 million electric vehicles annually.

“GM has secured all the battery material we need to build more than 1 million EVs annually in North America in 2025 and our future production will increasingly draw from domestic resources like the site in Nevada we’re developing with Lithium Americas. Direct sourcing critical EV raw materials and components from suppliers in North America and free-trade-agreement countries helps make our supply chain more secure, helps us manage cell costs, and creates jobs,” said GM CEO Mary Barra.

Lithium carbonate produced at Thacker Pass is set to be used to manufacturer GM’s Ultium battery cells. The Ultium platform is set to be used for several brands under GM’s various banners, including the GMC Sierra and Hummer, the Chevrolet Blazer, Silverado, and Equinox, the Cadillac Lyriq and Celestiq, and the BrightDrop Zevo 400 and Zevo 600. Battery cells are currently slated to be produced at four separate cell plants in the US, with a total capacity of 160 gigawatt hours per annum. EV’s meanwhile are set to be produced across four plants in Michigan, Tennessee, and Ontario.

Lithium Americas last traded at $29.47 on the TSX.

Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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