General Motors is set to invest $625m in cash and letters of credit in a joint venture with Lithium Americas to develop the Thacker Pass lithium carbonate project in Nevada, as the US carmaker seeks to secure domestic supplies of the critical battery material.
The deal, announced on Wednesday, will see GM take a 38 per cent stake in the project, with Lithium Americas holding the remaining 62 per cent. The investment replaces a previous $330m equity investment commitment from GM announced in January.
The joint venture, which is subject to certain conditions, including those related to a $2.3bn loan agreement from the US Department of Energy, will allow Lithium Americas to secure $625m in cash and letters of credit while avoiding common equity dilution.
“Our relationship with GM has been significantly strengthened with this joint venture as we continue to pursue a mutual goal to develop a robust domestic lithium supply chain by advancing the development of Thacker Pass,” said Jonathan Evans, president and chief executive of Lithium Americas.
The investment is the largest ever publicly announced by a US carmaker in a lithium carbonate project and highlights the strategic importance of Thacker Pass in creating a domestic supply chain for critical minerals.
Under the terms of the deal, GM will contribute $330m in cash on the closing of the joint venture, $100m at the final investment decision for phase one of the project, and a $195m letter of credit facility prior to the first draw on the DOE loan.
Lithium Americas will contribute $387m of funding to the joint venture for its 62 per cent ownership in the project. $211 m will be contributed upon the joint venture’s closing, and the remainder upon the final investment decision for phase one.
The joint venture will be managed by Lithium Americas, with a board of directors established at the joint venture level to oversee the project and approve its budgets and business plans.
GM has also agreed to extend its existing offtake agreement for up to 100 per cent of production volumes from phase one of Thacker Pass to 20 years to support the expected maturity of the DOE loan. Upon closing the joint venture, GM will also enter into an additional 20-year offtake agreement for up to 38 per cent of phase two production volumes.
The Thacker Pass project is the largest known measured and indicated lithium resource in North America, with the company targeting a nameplate capacity of 40,000 tonnes per annum of battery-quality lithium carbonate.
The joint venture is expected to close by the end of the year, with the final investment decision and full notice to proceed for Thacker Pass targeted for the same timeframe.
