GM Strengthens Lithium Supply Chain with US$625 Million Investment in Thacker Pass

General Motors (GM) (NYSE:GM) is strengthening its connection to Lithium Americas (TSX:LAC,NYSE:LAC) via a joint venture centered on advancing the Thacker Pass lithium project in Humboldt County, Nevada.

In a Wednesday (October 16) press release, the companies said GM will provide US$625 million in cash and letters of credit, and will acquire a 38 percent asset-level ownership stake in Thacker Pass.

The Detroit-based carmaker emphasized to Reuters that it is keen to secure electric vehicle (EV) raw materials.

"We don't want to become a mining company," Jeff Morrison, GM’s senior vice president, told the news outlet. "Our main goal is to build out a North American based, Western-allied, reliant supply chain. To do that, we have to pick partners and assets and figure out what they need to do to industrialize and be successful.”

Lithium, a key component in EV batteries, is in high demand as automakers ramp up their EV offerings. The Thacker Pass asset is touted as North America’s largest depositary of the resource.

GM's US$625 million contribution will be divided into phases. It will provide US$330 million in cash when the joint venture closes, and US$100 million at a later stage, when a final investment decision for Phase 1 is made.

There is also a US$195 million letter of credit facility that Lithium Americas will be able to use as collateral to support reserve account requirements under its conditional US$2.3 billion loan from the US Department of Energy.

The companies note in Wednesday's release that the new joint venture builds on GM’s previous investment in Lithium Americas. In February 2023, GM invested US$320 million into the company, acquiring 15 million common shares.

This week's agreement also extends GM's current Thacker Pass offtake agreement, with the company now having the right to up to 100 percent of production volumes from Phase 1 for 20 years. Once the joint venture closes, GM will also enter into a further 20 year offtake for as much as 38 percent of Phase 2 output volumes for Thacker Pass.

In addition to the Lithium Americas deal, GM has made several other strategic investments in the mining sector.

These include agreements to purchase cobalt from Glencore (LSE:GLEN,OTC Pink:GLCNF) an investment in Queensland Pacific Metals (ASX:QPM) for nickel and cobalt and a lithium supply deal with Arcadium Lithium (NYSE:ALTM,ASX:LTM).

Thacker Pass project has faced some challenges, including protests from local Indigenous communities and environmental groups. Concerns have been raised regarding its environmental impact and proximity to culturally significant lands. Despite this opposition, the mine has received the necessary permits to proceed — Lithium Americas said in its latest quarterly update that it expects to start "major construction" by the end of the year.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.