GENERAL MOTORS (GM) IS PUTTING UP $625 MILLION TO GREEN-LIGHT LITHIUM AMERICAS
General Motors (GM) is putting up $625 million to
green-light Lithium Americas' (LAC) Thacker Pass project in Nevada, which has
the largest-known deposit of the key battery metal in the U.S. The terms of the
investment, which has GM investing directly in the mine rather than acquiring
more shares, sent LAC stock jumping in early Wednesday stock market action.
GM will acquire a 38% ownership stake in the Thacker
Pass mine for $430 million in cash and an additional $195 million interest-free
credit facility. Lithium Americas said in a news release that its agreement
with GM will provide the collateral to unlock a $2.3 billion loan from the
Department of Energy announced earlier this year.
The tricks to stop the natural rise in the price of
lithium are very interesting. The lack of publication and opacity of data is
extremely important.
Who is behind these cloudy obscurantist actions?
Obviously and first of all, the large car’s manufacturers - mostly from China -
and all types of electrical equipment that increasingly use lithium-based
batteries.
But they are not the only ones, many options traders
continue to sell short and speculate “bearish downwards”.
We believe that to understand this, both types of
players should review the paradox of Buridan's donkey from the 14th century,
which stated that a donkey that had a bucket of water and a bucket of grain at
an equal distance ended up dying because it could not decide which one to start
with first.
Not only is demand constantly growing but also supply
is decreasing, mainly because at these price levels many lithium mines have
come to a standstill or closed permanently.
Business reporterAustralia also has the second-largest
reserves of the mineral after Chile, with the vast majority in Western
Australia, and a smaller amount in the Northern Territory.
The sharp decline in lithium prices has led to mine
shutdowns. Adelaide-based Core Lithium announced back in January that due to
"weak market conditions" it was suspending mining at its Finniss site
near Darwin, with the loss of 150 jobs.
Then in August, US firm Albemarle said it would be
scaling back production at its Kemerton lithium processing plant, located some
170km (100 miles) south of Perth. This is expected to lead to more than 300
redundancies.
Arcadium Lithium followed suit this month, announcing
that it would be mothballing its Mt Cattlin mine in Western Australia, blaming
low prices. The firm’s shares are listed in both the US and Australia.
Yet as some producers are putting work on hold, others
are expanding theirs, confident that global demand for lithium - and prices -
will bounce back.
Pilbara Minerals is one such firm. The Perth-based
miner aims to boost its lithium ore production by an additional 50% over the
next year.
“What we've learned historically from lithium pricing
is that it can change, and it can change rapidly," managing director Dale
Henderson recently told. “It doesn't faze us that much because we know the
long-term outlook is fantastic.”
A primary school of economics reasoning tells us that
if demand increases and supply decreases then...
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