General Motors (NYSE: GM) and Element 25 (ASX: E25) announced today in Detroit and Perth, Australia an agreement for Element 25 to supply up to 32,500 metric tons of manganese sulfate annually to support the annual production of more than 1 million GM EVs in North America. GM will provide Element 25 with an $85 million loan* to partially fund the construction of a new facility in the state of Louisiana for production of battery-grade manganese sulfate, a vital component in lithium-ion battery cathodes. Starting in 2025, Element 25 will produce manganese sulfate at the facility by processing manganese concentrate from its mining operations in Australia. It is projected to be the first facility of its kind in the United States. (AutoInformed: EV Battery Gold Rush Down Under – Stellantis and Element 25; EV Politics – Biden versus the UAW)
Element 25 says it will invest ~ US$290 million* to build a 230,000-square-foot facility. Site preparation is planned to begin in Q3 of 2023. The plant is scheduled to open in 2025. The facility is projected to create ~200 permanent non-union jobs when it is fully operational. This is a key element of contention non-union JVs – in the UAW contract talks this summer, which likely will result in a strike of unknown duration. GM, Ford and Stellantis all appear to be targets as there is talk in Detroit circles of abandoning the traditional pattern bargaining method where only on company is selected to lead the labor agreement talks with the others to subsequently follow the pattern established.
Click for more information.
“E25 is working to be a leading source of high quality, vertically integrated, traceable and ESG-compliant battery material to the global electric vehicle industry and GM’s support does more than accelerate our expansion in the United States,” said Justin Brown, Element 25 Managing Director. “Together, we are creating a resilient and sustainable North American supply chain that will help introduce millions of customers to the performance and environmental benefits of EVs.”
GM continues to increase its domestic supply base for EV production. In addition to manganese sulfate, GM has announced direct investments in lithium, nickel and other commodities, as well as cathode active material (CAM) and CAM precursor. GM and its joint venture partners are installing 160GWh of battery cell manufacturing capacity in the U.S., and its suppliers are “onshoring” production of permanent magnets and other EV components to North America.
Summary of Material Terms
The Agreement contemplates parallel commitments from the parties including:
- An Offtake Agreement for GM to buy up to 32,500 tons per annum of battery-grade HPMSM from Element 25 (E25) over a seven-year period from the proposed Facility in Louisiana (Offtake).
- Investment of US$85M structured as senior secured debt repayable over a seven-year period (linked to the term of the Supply Agreement), on commercial terms normal for a facility of this type (Loan).
- The Loan is secured over the assets of the Facility and the operating entity (Element 25 (Louisiana) LLC) (Borrower) which is a wholly owned subsidiary of Element 25 Limited, the Australian parent.
- The funds will be directed towards the construction costs of the Facility.
The agreements are subject to several conditions precedent (CPs) including:
- GM acceptance of the Feasibility Study (FS).
- A decision by the E25 board to proceed with the project based on the FS.
- Execution of the proposed lease for the plant site in Louisiana by November 2023.
CP for first Loan drawdown:
- Satisfaction of remaining conditions pursuant to other subordinated debt.
- E25 securing project financing for the balance of the project financing requirements.
- Provision of a final project budget satisfactory to GM.
- Other conditions customary of a senior secured financing including no event of default having occurred.
Supply of HPMSM to GM is expected to commence in 2025:
- 2025 volumes aligned with planned production ramp-up schedule.
- For years 2026-2032, GM commits to directly or indirectly purchase and E25 commits to supply HPMSM, based on requirements related to GM’s North American EV vehicle production.
- E25 will supply HPMSM produced at the Facility and that meets purity and other specifications as defined in the agreement (Product).
- Start of delivery of the Product from Plant commissioning in 2025.
- Term of the offtake to be for an initial seven-year period, subject to extension by mutual agreement.
*Exchange rate of 1US$ = 1.5058 AUD
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn.
He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe.
Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap.
AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks.
Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.
EV Battery Gold Rush – GM and Element 25
General Motors (NYSE: GM) and Element 25 (ASX: E25) announced today in Detroit and Perth, Australia an agreement for Element 25 to supply up to 32,500 metric tons of manganese sulfate annually to support the annual production of more than 1 million GM EVs in North America. GM will provide Element 25 with an $85 million loan* to partially fund the construction of a new facility in the state of Louisiana for production of battery-grade manganese sulfate, a vital component in lithium-ion battery cathodes. Starting in 2025, Element 25 will produce manganese sulfate at the facility by processing manganese concentrate from its mining operations in Australia. It is projected to be the first facility of its kind in the United States. (AutoInformed: EV Battery Gold Rush Down Under – Stellantis and Element 25; EV Politics – Biden versus the UAW)
Element 25 says it will invest ~ US$290 million* to build a 230,000-square-foot facility. Site preparation is planned to begin in Q3 of 2023. The plant is scheduled to open in 2025. The facility is projected to create ~200 permanent non-union jobs when it is fully operational. This is a key element of contention non-union JVs – in the UAW contract talks this summer, which likely will result in a strike of unknown duration. GM, Ford and Stellantis all appear to be targets as there is talk in Detroit circles of abandoning the traditional pattern bargaining method where only on company is selected to lead the labor agreement talks with the others to subsequently follow the pattern established.
Click for more information.
“E25 is working to be a leading source of high quality, vertically integrated, traceable and ESG-compliant battery material to the global electric vehicle industry and GM’s support does more than accelerate our expansion in the United States,” said Justin Brown, Element 25 Managing Director. “Together, we are creating a resilient and sustainable North American supply chain that will help introduce millions of customers to the performance and environmental benefits of EVs.”
GM continues to increase its domestic supply base for EV production. In addition to manganese sulfate, GM has announced direct investments in lithium, nickel and other commodities, as well as cathode active material (CAM) and CAM precursor. GM and its joint venture partners are installing 160GWh of battery cell manufacturing capacity in the U.S., and its suppliers are “onshoring” production of permanent magnets and other EV components to North America.
Summary of Material Terms
The Agreement contemplates parallel commitments from the parties including:
The agreements are subject to several conditions precedent (CPs) including:
CP for first Loan drawdown:
Supply of HPMSM to GM is expected to commence in 2025:
*Exchange rate of 1US$ = 1.5058 AUD
About Ken Zino
Ken Zino, editor and publisher of AutoInformed, is a versatile auto industry participant with global experience spanning decades in print and broadcast journalism, as well as social media. He has automobile testing, marketing, public relations and communications experience. He is past president of The International Motor Press Assn, the Detroit Press Club, founding member and first President of the Automotive Press Assn. He is a member of APA, IMPA and the Midwest Automotive Press Assn. He also brings an historical perspective while citing their contemporary relevance of the work of legendary auto writers such as Ken Purdy, Jim Dunne or Jerry Flint, or writers such as Red Smith, Mark Twain, Thomas Jefferson – all to bring perspective to a chaotic automotive universe. Above all, decades after he first drove a car, Zino still revels in the sound of the exhaust as the throttle is blipped during a downshift and the driver’s rush that occurs when the entry, apex and exit points of a turn are smoothly and swiftly crossed. It’s the beginning of a perfect lap. AutoInformed has an editorial philosophy that loves transportation machines of all kinds while promoting critical thinking about the future use of cars and trucks. Zino builds AutoInformed from his background in automotive journalism starting at Hearst Publishing in New York City on Motor and MotorTech Magazines and car testing where he reviewed hundreds of vehicles in his decade-long stint as the Detroit Bureau Chief of Road & Track magazine. Zino has also worked in Europe, and Asia – now the largest automotive market in the world with China at its center.