GM is investing $650 million in Lithium Americas to build a mine

Lithium carbonate from Thacker Pass, the largest known source of lithium in the US, is used in GM’s proprietary Ultium battery cell.

“Sourcing critical EV raw materials and components directly from suppliers in North America and free trade countries helps make our supply chain more secure, helps us control cell costs and creates jobs,” GM CEO Mary Barra said in a statement separate statement.

“The agreement with GM is an important milestone in moving Thacker Pass toward production while providing a basis for the separation of our U.S. and Argentina businesses,” said Jonathan Evans, CEO of Lithium Americas.

The investment will be divided into two tranches. The first tranche funds of $320 million will be held in escrow pending the satisfaction of certain conditions, including the outcome of the record of decision ruling currently pending in the US District Court.

This figure grants GM exclusive rights to the first stage of lithium production at Thacker Pass and nearly 10% interest in the miner, with an additional $330 million to follow. The second payment will come once the Thacker Pass mine has been separated from Lithium Americas’ Argentine operations, which will be called Lithium International, as announced in November.

“This investment is a testament to the boost the IRA has given to the U.S. electric vehicle value chain,” Fastmarkets NewGen analyst Jordan Roberts said in an emailed statement. “We project that Thacker Pass will account for nearly 20% of North America’s processed production by 2032, giving GM a massive share of potential U.S. lithium production.”

GM’s move marks a major escalation in the battle between electric vehicle makers to secure battery metals. It also highlights a growing trend of integration between the automotive and mining industries.

The announcement follows comments from a US judge who suggests she will decide “in the next few months” whether former President Donald Trump made a mistake in approving the lithium project in 2021.

The Vancouver-based miner, who has obtained all the necessary permits to start construction, was expecting a verdict by September last year.

Enough for 1 million electric vehicles per year

The mine has the capacity to produce lithium for up to 1 million electric vehicles (EV) per year and is expected to create 1,000 jobs and 500 permanent positions during construction.

Lithium Americas plans, according to a 2018 pre-feasibility study, that the open pit mine project’s production capacity will reach 60,000 tonnes per year of battery grade lithium carbonate over a mine life of 46 years.

Measured and Indicated Resources at Thacker Pass total 385 million tonnes averaging 2,917 parts per million (ppm) lithium for 6 million tonnes of lithium carbonate equivalent (LCE). Inferred Resources are 147 million tonnes averaging 2,932 ppm for 2.3 million tonnes of LCE.

As the world needs more and more lithium, investment in new supply has not kept pace with rising demand, which is projected to reach over 1 million tonnes of lithium carbonate equivalent by 2025.

GM shares are up about 5.4% in premarket trading to $38.24. Along with the investment, GM also reported better-than-expected fourth-quarter results and provided financial guidance for 2023 that beat analyst estimates.