GM’s decision to invest in lithium mine highlights supply angst for green transition minerals

General Motors announced today that it will invest $650 million in a lithium mine in the United States to secure materials for its batteries. That includes $320 million this year for the rights to the first stage of lithium production at the Lithium Americas-owned Thacker Pass mine and $330 million later, which includes 10% of the company’s stock.

“This is a historic transaction, and it certainly won’t be the last major supply chain announcement for GM,” said chief executive Mary Barra.

The investment follows similar moves by Tesla and other automakers as angst over materials supply builds. He points out that automakers see the potential for shortages and price spikes in essential supplies.

A look at the Thacker Pass projection – which I’ve written about before – is a great introduction to the past and future of the issues. Despite needing lithium production, it has been stuck in hell for a decade but is now expected to progress to first production in the second half of 2026, but a critical court ruling comes this year as defenders of the environment are trying to protect sage-grouse habitat.

The earth’s crust is not lacking in materials, but the speed of the green transition will come up against the harsh realities of low grades and the difficulty of authorizing mines. Ironically, it is environmental approvals that are stifling and delaying the opening of mines.

Shares of Lithium Americas are up 12.3% today on the news, but the mineral and the company are an interesting case study. Battery researchers are working hard to replace lithium in electric vehicle batteries. If successful, the price of lithium could crash. However, if they are not successful, there could be critical shortages of lithium, driving up the parabolic price for years until supplies can come online. This dynamic makes it difficult for companies to invest in lithium mining due to the 10-year lead time and the possibility of being challenged by technology at any time. In turn, this dangerous risk-reward dynamic will lead to lower investment and a shortage of supply.


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