By Melanie Burton and Harish Sridharan
MELBOURNE (Reuters) - Element 25 Ltd said on Monday it will supply manganese sulphate to General Motors (NYSE:GM) as the automaker looks to secure supply of battery minerals for its North American electric vehicles, sending the miner's shares up more than 20%.
The deal is the second by General Motors for Australian battery minerals following a move last October to take an equity stake in Queensland Pacific Metals to secure a new source of nickel and cobalt for battery cells.
With the GM deal and a pact inked with automaker Stellantis in January, Element 25 has found customers for 65% of its first phase of production at a $290 million battery grade manganese sulphate plant it is building in Louisiana.
The plant is scheduled to open in 2025.
The company is now talking with other potential customers and expects to sign a third supply deal to finalise finance for the plant by calendar year end, Managing Director Justin Brown told Reuters.
"There's room for one more offtake partner in that mix," he said.
He said Element 25's high purity processing technology provides an alternative to China, where almost all of the world's high purity manganese is processed.
The company plans to set up processing plants near customers and also in Australia as the country's battery industry develops.
Under Monday's agreement, GM will buy up to 32,500 tonnes of manganese sulphate per annum from Element 25 over a seven-year period from the new Louisiana facility that will be supplied from its Western Australian Butcherbird mine.
The company did not disclose the value of the GM deal. Shares of Element 25 rallied as much as 23% before trading at A$0.67, up 12%.
GM will provide Element 25 with an $85 million loan to partially fund construction of the Louisiana facility, the ASX-listed miner said.
GM currently expects to build 400,000 electric vehicles in North America from 2022 through mid-2024 and increase capacity to 1 million units annually in North America in 2025.