Auto Giants Sign New Mining Deals to Secure Battery Metal Supply Chains
In a push to secure critical materials for electric vehicle (EV) batteries amid surging demand, top carmakers like General Motors, Ford and Tesla are continuing to ink deals with mining companies in North America to lock in long-term domestic supply. Some companies are heading south of the border, including Tesla, which just announced plans to open a $5 billion plant in Mexico. BMW also recently announced a $866 million investment in EV and battery production in San Luis Potosi, while General Motors plans to invest over $1 billion in the Latin American region to produce EVs. Meanwhile, Canada has also emerged as a key contender in the EV battery supply chain after announcing over $15 billion in investments over the past 10 months for critical mineral mining and processing, battery component manufacturing, EV production and the nation’s first gigafactory. Rising battery metal demand stands to benefit mining companies like E3 Lithium (TSXV:ETL) (OTCQX:EEMMF), Lithium Americas (TSX:LAC) (NYSE:LAC), Sayona Mining Limited (OTCMKTS:SYAXF), Albemarle Corporation (NYSE:ALB) and Sociedad Quimica y Minera de Chile SA (NYSE:SQM).
E3 Lithium’s (TSXV:ETL) (OTCQX:EEMMF) goal is to make high-purity lithium products that can be used in batteries by developing its globally significant 24.3 million tonnes of inferred lithium resources. E3 has several advantages in the global race to supply critical battery minerals – it operates from a secure and stable jurisdiction in Alberta, Canada, has a process designed to adhere to the highest ESG standards, including anticipating using less than 3% of the land of traditional lithium mining operations – all factors that make it highly attractive to battery and auto manufacturers.
On March 7, E3 Lithium announced it has been awarded C$3.545 million from Natural Resources Canada’s Critical Minerals Research Development and Demonstration (CMRDD) program. The funding comes from the Government of Canada’s 2021 Federal Budget to support the development of Canadian critical minerals and will be used towards the design, construction and operation of E3’s field pilot plant, which is on track to begin operations in Q3 2023.
This isn’t the first funding E3 Lithium has received to support its development. Previously announced funding includes a $1.8 million grant from Alberta Innovates and a $27 million conditionally repayable investment from the Strategic Innovation Fund.
“We are ecstatic to receive funding from Natural Resources Canada to support the work we are doing to produce battery-grade lithium,” said Chris Doornbos, President and CEO of E3 Lithium. “Receiving support from all levels of government to develop our lithium resource speaks volumes to the importance placed on commercializing critical minerals from Alberta and the progress E3 has made in developing this industry.”
“Canadian innovators are leading the way towards a cleaner future. Today’s investment of more than $3.5 million in E3 Lithium will help to advance the development of a dynamic and competitive critical minerals sector through the development and demonstration of innovative processing technologies,” said the Honourable Jonathan Wilkinson, Minister of Natural Resources Canada. “This means good jobs for workers, more investment in Canadian innovation, and lower emissions across the country – all part of our plan to build a cleaner Canada and a prosperous, sustainable economy that works for everyone.”
Last month, E3 Lithium announced it has received $4.9 million since Q3 2022 from the exercise of warrants from equity financings completed on December 17, 2020 and February 8, 2021. The remaining 3.4 million warrants outstanding belong to Imperial Oil, which were prepaid for a total of $6.35 million and expire in June 2024. E3 currently has 64.4 million issued and outstanding shares.
Lithium Miners Are Expanding Production
Lithium Americas (TSX:LAC) (NYSE:LAC) announced on March 2 that development at its Thacker Pass lithium project in Nevada had begun. The statement comes on the heels of a February federal court ruling that rejected concerns that the project would cause unnecessary harm to the environment or wildlife and permitted work to begin. The proposed mine has the potential to become North America’s largest supply of lithium for electric car batteries, assisting US President Joe Biden’s efforts to reduce the country’s reliance on Chinese supplies for the metal. In January, General Motors Co announced a $650 million investment in Lithium Americas to help develop the project.
Sayona Mining Limited (OTCMKTS:SYAXF) has successfully restarted process operations at its flagship North American Lithium (NAL) facility in Quebec, Canada, marking another milestone in the resumption of spodumene (lithium) production. Following the conclusion of commissioning activities, the processing start-up included the circulation of ore through the entire system, from crushing to sorting, grinding, and separation. The restart is proceeding on schedule and within budget, with the first saleable lithium concentrate planned for late March 2023. This would be a significant achievement for Sayona and Quebec as the leading hard rock lithium producer in North America.
Albemarle Corporation (NYSE:ALB), a global leader in transforming lithium and bromine into essential ingredients for mobility, energy, connectivity, and health, announced on February 22 that it has signed definitive agreements with Mineral Resources Limited to restructure the parties’ MARBL lithium joint venture in Australia and for MinRes to invest in Albemarle conversion assets in China. The completion of these agreements follows the announcement in February 2022 of the signing of a non-binding letter of intent.
Chile’s Sociedad Quimica y Minera de Chile SA (NYSE:SQM), the world’s second-largest lithium producer, plans to invest $3.4 billion in new capital by 2025 to increase production capacity to 210,000 tonnes of lithium carbonate equivalent per year, up from 180,000 tpa now. The large projected investment comes after the Santiago-based company announced record earnings last year due to higher metal prices spurred by increased demand from the electric vehicle (EV) market. SQM earned $3.9 billion in net income in 2022, nearly tripling its earnings of $585.5 million in 2021. Overall revenue for the year was $10.7 billion, up from about $2.9 billion reported for the fiscal year ending December 31, 2021. SQM announced this year that it would invest $1.4 billion of the total budgeted for the 2023-2025 period as it expands its capacity in Chile.
E3 Lithium has outlined its 2023 goals on March 2, which will provide the company with the necessary catalysts to move towards producing battery-grade lithium from its significant resources in Alberta.
Featured Image @ Depositphotos
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