General Motors (GM) has decided to partner with Lithium Americas (LAC) on a new joint venture. The collaboration will focus on the extraction of lithium from a significant Nevada mining site. Lithium is a crucial component of electric vehicle (EV) batteries.
Following the announcement on Wednesday, LAC's shares experienced a hefty uptick. GM has committed $625 million to the project, which will see them taking a 38% stake in the Thacker Pass site. As part of the investment, $430 million will be disbursed as a direct cash payment to support the first phase of construction at Thacker Pass lithium mine site. The remainder will be offered as credit to assist with reserve account requirements for the project.
These funds could be used as collateral for a Department of Energy conditional loan worth $2.3 billion announced in March for Thacker Pass development. Lithium Americas will initially sink $211 million into the venture and will retain controlling ownership with a 62% stake.
GM's involvement in this venture replaces its original investment commitment of $330 million in Tranche 2 common equity made in January 2023. Jeff Morrison, GM's chief procurement and supply chain officer, expressed satisfaction with the progress Lithium Americas has made. He mentioned that securing raw materials like lithium from domestic suppliers would help GM control battery cell costs, deliver value to customers and investors, and create jobs.
Despite LAC shares seeing a 26% increase on Wednesday, they have slipped over a third in value over the year. GM shares rose by 2% on Wednesday and have increased by almost 37% over the course of this year.