Along with announcing a big earnings beat today, General Motors (GM) reported that it will invest $650 million in Lithium Americas to help fund the development of that company’s Thacker Pass lithium mine in Nevada. The Thjacker Pass mine is projected to be the largest lithium mine in North America, but it is mired in a long-running lawsuit brought by Native American tribes and environmental groups that fear mining and processing of lithium would inflict large-scale damage to the local environment. (As part of the project, the company would build a plant to produce 3,000 metric tons of sulfuric acid a day. The sulfuric acid would be used to extract lithium from clays.)
Shares of Lithium Americas were up 14.60% at the close today on the news. (GM< also has a supply deal with Controlled Thermal Resources, a company that is trying to produce lithium from brines in California.) Under the agreement, GM will buy $650 million of shares in Lithium Americas in two equal parts, with the first tranche coming only if Lithium Americas prevails in an ongoing court case. A U.S. judge earlier this month said she would rule "in the next couple of months" in the case, which centers on whether former U.S. President Donald Trump erred when he approved the mine just before leaving office in 2021. GM would supplant China's Ganfeng Lithium to become Lithium Americas' largest shareholder. GM has also agreed to buy all the lithium from Thacker Pass when it opens in 2026. That would be roughly 40,000 tonnes per year. The second tranche of funding would come after Lithium Americas completes a long-planned split, expected later this year, of its North and South American operations. This won't be the last lithium deal as electric vehicle companies look to lock up supplies of battery minerals. Other targets to watch include North Carolina's Piedmont Lithium (PLL) and Australia's Pilbara Minerals (PILBF). Lithium Americas is a member of my Millennial Portfolio. The shares are down 12.23% since I added them to this portfolio on August 19, 2022.
