GM Stock (NYSE:GM)
To assist in developing Nevada’s Thacker Pass lithium mining project, which has enough lithium for 1 million electric cars per year, General Motors Company (NYSE:GM) will invest $650 million in Lithium Americas (NYSE:LAC) Corp. As a result, GM stock surged in the market.
The agreement, which was announced on Tuesday, is the latest by an automaker to lock up its supply of the key metal amid the rush to go green and provides Lithium Americas with a major partner in its efforts to develop North America’s largest lithium mine, which has been the subject of a protracted legal battle.
In noon trade, Lithium Americas’ stock jumped $14.24, or 14.1%, to $25.16. GM stock price increased by over 8% on Tuesday after it released a strong annual profit estimate.
Using a huge clay deposit, Lithium Americas hopes to achieve a first in commercial lithium extraction by processing it at Thacker Pass. This is the automotive titan’s second large investment in the new lithium method in as many years. General Motors and Controlled Thermal Resources Ltd, a company working to extract lithium from geothermal brines in California, entered into a supply agreement in 2021.
GM would become the company’s biggest stakeholder, surpassing Ganfeng Lithium of China. When the Thacker Pass lithium mine opens in 2026, GM has committed to purchasing all 40,000 tonnes of annual production.
General Motors has agreed to pay $650 million to acquire a minority stake in Lithium Americas, split into two $250 million payments contingent on Lithium Americas’ success in a pending lawsuit. The dispute concerns whether or not former U.S. President Donald Trump made a mistake when he authorized the project in the days before leaving office in 2021. A U.S. judge stated earlier this month that she would issue a ruling “in the next few months.”
Executive Vice President of Lithium Americas Jon Evans remarked on a conference call that the firm’s likelihood of losing the lawsuit and its licenses is “very low.”
After Lithium Americas’ long-planned separation of its North and South American businesses is finalized later this year, the company will be eligible for its second finance installment.
Due to adjustments in production goals, Lithium Americas increased the initial funding for the Thacker Pass project from $1.06 billion to $2.27 billion.
The facility will include many processing facilities, including a plant to create sulfuric acid at a rate of 3,000 metric tons per day to separate lithium from the clay.
Evans anticipates that the loan Lithium Americas has asked for from the U.S. Department of Energy will provide will cover a “significant component” of the remaining project cost.
Although one Native American tribe supports Lithium Americas, other tribes and environmental organizations are concerned about the company’s potential impact on wildlife and water sources.
Great Basin Resource Watch’s John Hadder, a plaintiff in the lawsuit, stated, “If I were GM, I would be asking some hard questions about how the corporation can solve the concerns at Thacker Pass.”
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