General Motors (GM) announced a $650 million equity investment in Lithium Americas Corp. This would be the largest investment thus far by an automaker to produce battery raw materials, with GM to become Lithium Americas’ largest shareholder. The investment supports the company’s previously announced separation by creating the foundation for an independent U.S. business focused on developing the Thacker Pass mine and a North American lithium supply chain.
The equity investment consists of two tranches. The first tranche, $320 million, will be used to buy shares amounting to 9.999% of Lithium Americas before separation; and the second $330 million tranche investment, will be invested in the company’s U.S. business following the separation of its businesses in the U.S. and Argentina.
After the first tranche investment, GM will receive exclusive access to Phase 1 production through a binding supply agreement and a Right of First Offer (ROFO) on Phase 2 production. The investment will support the development of the Thacker Pass deposit, the largest known lithium resource in the U.S. The Thacker Pass resource could supply the lithium needed for up to 1 million electric vehicles (EVs) per year.
The Thacker Pass construction plan targets 80,000 metric tons per year (mt/y) of battery-quality lithium carbonate production capacity in two phases of 40,000 mt/y each. Phase 1 production is expected to commence in the second half of 2026. Project life is currently 40 years using less than 25% of the current measured and indicated mineral resource estimate. The proven and probable mineral reserves for Thacker Pass are 3.7 million mt lithium carbonate equivalent (LCE) at an average grade of 3,160 ppm Li.
The Phase 1 and Phase 2 capital cost estimates of $2.27 billion and $1.73 billion, respectively, are based on cost estimates from Q3 2022 and include a 13.1% contingency. Lithium Americas awarded an engineering, procurement and construction management (EPCM) contract for the construction of Thacker Pass to Bechtel Corp.
Lithium Americas has also entered into an offtake agreement to supply GM with lithium carbonate production from Phase 1 of Thacker Pass in connection with the escrow release of the Tranche 1 investment. The price within the offtake agreement will be based on an agreed-upon price formula linked to prevailing market prices. The term of the offtake agreement will be 10 years from the commencement of Phase 1 production, with the option for GM to extend by an additional five years. GM will also have a ROFO on the offtake of Thacker Pass’ Phase 2 production.
Lithium Americas submitted a formal application to the U.S. Department of Energy (DoE) in April 2022 for funding for Thacker Pass through the DoE’s Advanced Technology Vehicles Manufacturing (ATVM) loan program. The company believes that the specific terms of this investment and offtake agreement demonstrate the company’s commitment to supply lithium to U.S. domestic EV production in alignment with the principles of the ATVM and position it as a model candidate to receive the maximum potential benefit of the ATVM program. The proceeds from the DoE’s ATVM loan are expected to contribute a significant portion of the initial capital costs for Thacker Pass Phase 1.
Lithium Americas said it continues to prepare for construction while it awaits a ruling for the appeal of the issuance of the Record of Decision following a hearing held by the U.S. District Court, District of Nevada on January 5, 2023. During the hearing, plaintiffs and the company addressed final questions, the Federal Court reaffirmed no additional hearings or briefings are required and they expect to issue a decision in the next couple of months.
