By Ernest Scheyder
(Reuters) -General Motors Co on Tuesday said it will invest in lithium technology startup EnergyX as it expands further into the mining industry, the latest deal by the car maker to ensure long-term supplies of the metal used to make electric vehicle batteries.
The global push by automakers to electrify their fleets has sparked a rush for stable supplies of lithium, copper, nickel and other critical minerals. Demand is expected to exceed supply by the end of the decade, fueling interest in novel production methods.
Privately-held EnergyX is one of several companies developing so-far unproven direct lithium extraction technologies (DLE) that could help GM filter the metal for its Ultium battery packs from some types of brine that have been largely ignored by the mining industry in favor of evaporation ponds and open-pit mines.
Brine deposits are essentially salt-infused waters found throughout the globe. Many teem with lithium, calcium and other minerals, and DLE technologies aim to separate out the lithium and leave the rest.
As part of the investment, GM's scientists will work to help EnergyX commercialize the DLE technology, trying to succeed where it, rivals Rio Tinto (NYSE:RIO) Ltd, BMW-backed Lilac Solutions Inc and others have so far failed. GM told Reuters it believes DLE "could be the most efficient method to extract lithium from brine sources."
The automaker plans to lead a Series B round of financing for EnergyX worth $50 million and to help finance EnergyX's future expansion across North and South America. Reuters first reported GM's investment earlier on Tuesday.
GM, which declined to say how much of the Series B round it was funding, will have the right of first refusal to buy lithium from any projects that EnergyX develops.
"We are committed to securing EV-critical minerals that are sustainable and cost competitive," said Jeff Morrison, GM's vice president of global purchasing and supply.
EnergyX, also known as Energy Exploration Technologies Inc, has said it aims to launch an initial public offering by 2024. As part of any IPO, private equity firm Global Emerging Markets Group plans to invest $450 million in EnergyX once shares begin trading.
LITHIUM METAL FROM BRINE
EnergyX has said its technology can make lithium metal directly from brine, a tantalizing prospect for GM that could let the automaker bypass lithium refining, which is widely seen as a key supply-chain bottleneck.
The EnergyX investment comes after GM in January agreed to pay $650 million to become the largest shareholder in Lithium Americas (NYSE:LAC) Corp, which is developing the Thacker Pass clay lithium project in Nevada.
The automaker in 2021 also invested in privately held Controlled Thermal Resources Ltd (CTR), which is trying to use DLE technology to develop a geothermal brine project in southern California.
GM's investment is a major vote of confidence in EnergyX, which was stung last year when officials in Bolivia - home to the world's largest lithium resource - disqualified the startup from a DLE selection process.
"This GM investment will completely change the trajectory of EnergyX," said Teague Egan, the startup company's founder and chief executive.
EnergyX is building five demonstration facilities that it plans to locate in Argentina, Chile, and in the U.S. states of California, Arkansas and Utah. Potential customers would supply brine from acreage that they own in order to test EnergyX's technology, before signing any development deal.
The sites selected in the United States are near existing lithium brine reserves owned by Standard Lithium Ltd, Compass Minerals International (NYSE:CMP) Inc and CTR, each of whom has selected a DLE technology provider but not yet launched production.
GM said it is working with CTR and EnergyX to find the best technology to extract lithium from California's Salton Sea, where CTR has been trying to use technology from Lilac Solutions, Koch Industries and others to produce the battery metal.
"With CTR we have a great resource and with EnergyX we have a great potential technology," said GM spokesperson Priscilla Zuchowski.