Automakers invest upstream for lithium as the midstream battery buildout gathers pace

Several announcements Thursday underlined the growing momentum with which an independent-from-China electric vehicle (EV) battery supply chain is taking shape in North America.

Major automaker Stellantis N.V. (NYSE: STLA) said Thursday it has invested over US$100 million in Controlled Thermal Resources Holdings’ Hell’s Kitchen project in California. This geothermal lithium project aims to become the world’s largest, capable of producing up to 300,000 tonnes of lithium carbonate equivalent (LCE) yearly.

Stellantis’s investment underpins plans to produce over 25 all-new battery electric vehicles (BEVs) and achieve 50% BEV sales by 2030.

Privately owned Controlled Thermal plans to spend more than US$1 billion to separate lithium from geothermal brines extracted from beneath California’s Salton Sea.

Initially targeting 25,000 tonnes annually, the plan expanded to supply up to 65,000 tonnes potentially. Controlled Thermal says its innovative direct lithium extraction (DLE) process, using renewable energy and steam, reduces environmental impact while extracting lithium from geothermal brines.

Controlled Thermal is scheduled to begin supplying battery-grade lithium hydroxide monohydrate for Stellantis in 2027. The company expects to create 480 construction jobs and upward of 940 direct project jobs when the resource is fully developed.

According to Reuters, Controlled Thermal aims to obtain final permits by October and start construction of a commercial lithium plant soon after that. Goldman Sachs is leading the search for additional debt and equity financing.

Controlled Thermal had separately agreed to supply lithium to General Motors (NYSE: GM) by 2024, but that goal has been pushed to 2025.

GM added that it has enough raw material supply to reach its target of producing 1 million EVs by 2025.

In a separate development this week, Piedmont Lithium (NASDAQ: PLL; ASX: PLL) exercised its option to acquire an initial 22.5% stake in Atlantic Lithium’s (AIM: ALL; ASX: A11) Ewoyaa project in Ghana. 

Quebec investment

Meanwhile, U.S. automaker Ford Motor Co. (NYSE: F) is collaborating with EcoProBM and SK On to build a battery materials production plant in Bécancour, Que., for which the federal and Quebec governments are providing funding of $644 million, Ottawa announced Thursday.

The consortium aims to create the EcoPro CAM Canada facility, producing cathode active battery materials. The plant’s output will supply batteries for Ford’s future EVs.

The Canadian federal government will contribute $322 million through the Strategic Innovation Fund, and Quebec offers a partially forgivable loan of $322 million through the economic development agency of the Quebec government, Investissement Québec.

“This investment shows once again that Canada is the green strategic partner of choice for global leaders in the automotive industry,” said François-Philippe Champagne, Canada’s Innovation, Science and Industry minister, in a statement. “Today, we are strengthening Quebec’s key position in the electric vehicle supply chain while continuing to build Canada’s battery ecosystem.”

In late May, Quebec’s Nemaska Lithium signed a contract with Ford to deliver lithium products, including lithium hydroxide, over 11 years. That makes Ford the first customer for the compounds produced at Nemaska’s plant in Bécancour, Que. The agreement calls for delivering up to 13,000 tonnes of lithium hydroxide per year.

Nemaska Lithium is owned in equal parts by Investissement Québec and Livent, which has merged with Allkem (TSX: AKE; ASX: AKE).

Other recent announcements

Early in July, Stellantis signed a preliminary agreement with NioCorp Developments (TSX: NB; NASDAQ: NB) to access rare earth products from the junior’s Elk Creek plant and mine in Nebraska. The non-binding term sheet outlines a 10-year offtake contract for specific amounts of neodymium-praseodymium, dysprosium, and terbium oxide. The final volumes will be determined in a definitive agreement, subject to project financing.

The deal followed Stellantis’s pledge to invest $207 million in McEwen Copper, a subsidiary of McEwen Mining (TSX: MUX; NYSE: MUX), which holds the Los Azules copper project in Argentina.

Stellantis has also invested in Vulcan Energy Resources, which is developing a German direct lithium extraction project.

Meanwhile, early in July, the Ontario government and partners Stellantis and LG Energy Solutions agreed to continue construction on the NextStar EV battery plant, potentially worth up to $15 billion in tax breaks for the project. The province will provide $5 billion in tax breaks over 10 years, while the federal government will contribute $10 billion.

The deal aims to secure jobs and keep Ontario competitive in the global EV industry. Construction has already resumed, and the agreement is conditional on continuing the U.S. Inflation Reduction Act.