US auto giant General Motors has joined the likes of Ford, Toyota and Tesla in striking deals with Australian producers of key renewable metals.
GM will invest up to $69 million ($A108 million) and take an equity stake in Queensland Pacific Metals (QPM) to secure a new source of nickel and cobalt for battery cells for use in the its electric vehicles (EVs).
GM said the investment will help support electric-vehicle eligibility for consumer incentives under new, clean energy US tax credits in the Inflation Reduction Act (IRA) which contains hundreds of billions of dollars of spending and tax assistance to the renewables sectors.
The news saw QPM shares soar 16.6% to 17.5 on the ASX yesterday.
Under the IRA (passed in early August) makers of EVs must source battery minerals from the US or from countries with free trade agreements in order to qualify for the consumer EV tax credits.
Australia, Canada, Chile and Mexico have free trade deals with the US which will allow car and battery makers to source key metals from Australian mines and other processors.
GM said the nickel laterite ore is expected to be processed using a new, proprietary process that helps reduce waste.
The GM investment is to assist in the development of its proposed Townsville Energy Chemicals Hub (TECH) Project in Northern Australia.
High-grade nickel laterite ore will be imported from New Caledonia.
General Motors said it expects to use the materials from QPM in its to Ultium battery cells for its EVs.
General Motors will be investing an initial $31.4 million in QPM by buying 174.6 million shares at 18 cents each.
It will also receive 46.8 million options with a 20-cent exercise price.
The cash will go towards the construction of the TECH Project, expected to start in 2023
In return, GM and QPM will commit to a 15-year offtake agreement for the first phase of the project. That will see GM buying up around 6,000 tonnes of nickel and around 800 tonnes of cobalt a year.
That will grow to around 16,000 tonnes of nickel and 1,800 tonnes of cobalt after Queensland Pacific Metals’ other commitments are met.
GM has also agreed to participate in a capital raising conducted as part of the TECH Project’s final investment decision (FID). That will see GM with offtake rights for the life of the project. GM will put in $44 million.
After that, the duo could commit to an additional yearly supply of around 16,000 tonnes of nickel and 1,800 tonnes of cobalt from the project’s second phase expansion.
In Wednesday’s statement GM vice president of global purchasing and supply chain Jeff Morrison revealed that:
“The collaboration with Queensland Pacific Metals will provide GM with a secure, cost-competitive and long-term supply of nickel and cobalt from a free-trade agreement partner to help support our fast-growing EV production needs.”
Interestingly he said GM already has binding agreements securing all battery raw material supporting our goal of 1 million units of annual capacity in North America by the end of 2025.
