Lithium Americas Corp., a prominent entity in the lithium production industry, has entered a significant agreement with General Motors Holdings LLC and the U.S. Department of Energy. This agreement marks a crucial milestone as it enables the initial withdrawal of $435 million from a larger $2.26 billion DOE loan designated for the Thacker Pass lithium project. The move is expected to enhance domestic lithium production and reinforce supply chains within the United States.
This partnership illustrates a unified approach by Lithium Americas and GM, both recognizing the strategic role of lithium in advancing transportation and energy storage solutions. As the demand for electric vehicles rises, ensuring a stable lithium supply becomes essential for the automotive sector, making this collaboration particularly significant.
Key provisions of the agreement
The agreement includes several important provisions that will influence the progress of the Thacker Pass project:
- The U.S. Department of Energy has agreed to defer$182 millionof debt service during the first five years of the loan.
- In return for the loan draw, the DOE will receive:
- A5% equity sharein Lithium Americas via warrants, which allow for the purchase of common shares at a nominal price of$0.01per share.
- A5% economic interestin the joint venture through warrants permitting the acquisition of non-voting, non-transferable equity stakes at the same$0.01per unit price.
- Additionally, Lithium Americas is required to set aside an extra$120 millioninto reserve accounts associated with the DOE loan, to be funded within one year of the first draw.
- To improve the project’s viability, GM will modify its existing lithium offtake agreement, allowing the joint venture to negotiate third-party offtake agreements for surplus production not anticipated for GM’s acquisition.
Statements from company leaders
Jonathan Evans, President and CEO of Lithium Americas, expressed appreciation for the collaborative efforts from GM and the U.S. government. He underscored the importance of the project, stating, “This initiative is crucial for establishing large-scale lithium production within the U.S., enhancing the supply chain, creating numerous jobs, and contributing to national energy security.”
Shilpan Amin, Senior Vice President, Global Chief Procurement and Supply Chain Officer at GM, reiterated these views. He noted that the Thacker Pass project will reduce reliance on imported lithium and support manufacturing across various sectors, including aerospace and defense. Amin stated, “We are thrilled to witness the project’s progression, and we appreciate the Administration’s backing as we strive for a resilient supply chain.”
Implications for the joint venture
The terms of the agreement stipulate that if the DOE fully exercises its warrants, the economic interest in the joint venture will be allocated as follows: 59% for Lithium Americas, 36% for GM, and 5% for the DOE. Voting rights will remain at 62% for Lithium Americas and 38% for GM. Furthermore, GM retains a call right to acquire the DOE’s warrants or units once the Thacker Pass project reaches substantial completion, contingent on a mutually agreed price.
If an agreement is not reached, the DOE’s interests may be converted into common equity under a predetermined conversion ratio. The DOE will also have the authority to appoint a representative to observe joint venture board meetings as long as it holds warrants or units.
Financial adjustments and future outlook
As the project advances, the total amount of the DOE loan has been revised to $2.23 billion. The principal remains at $1.97 billion, while capitalized interest during construction has been adjusted downward to $256 million, reflecting a lower projected interest rate of 5%. The loan’s term from the date of the first draw is expected to span approximately 24 years, with the first draw projected in the fourth quarter of 2025.
GM’s current offtake agreement allows for the purchase of up to 100% of production from Phase 1 and 38% from the entire Thacker Pass project over a duration of 20 years. The agreement will be updated to enable the joint venture to establish firm volume commitments with third parties for production not expected to be acquired by GM.
The terms of the initial draw remain under negotiation and are subject to final agreements, corporate approvals, and customary conditions. Stakeholders are advised to exercise caution as the situation evolves.
About Lithium Americas
This partnership illustrates a unified approach by Lithium Americas and GM, both recognizing the strategic role of lithium in advancing transportation and energy storage solutions. As the demand for electric vehicles rises, ensuring a stable lithium supply becomes essential for the automotive sector, making this collaboration particularly significant.0