MATERIALS OUTLOOK

GM’s Foray into Mining

by Royce Lowe

General Motors has fallen behind in the EV race. It lags Ford, and of course Tesla, and is trying to speed ahead in the race for metals. GM is competing for a stake in Brazil’s Vale’s Base Metal Unit, according to those ubiquitous “people familiar with the matter.” Vale is splitting the base metal assets from its iron ore operations and wants to unveil a strategic partner for the new entity in the first half of 2023. Vale is making this move as a shift away from fossil fuels spurs demand for materials that are key to the manufacture of EV batteries. General Motors and Lithium Americas Corp. recently agreed a $650 million dollar deal to develop the largest U.S. lithium deposit at the Thacker Pass mine in Nevada. This gives General Motors exclusive access to the first phase of production, which is expected to begin in 2026, and is forecast to supply as many as 1 million EVs per year.

GM’s CEO, Mary Barra, says “We’ll continue to work with many people in the industry, especially in lithium and the other critical minerals.” She continues “I think we’ll be positioned to have a competitive advantage.”

GM is pledging to sell nothing but plug-in models by the middle of the next decade. The company has opted to build its own battery pack and dedicated EV platform rather than move quickly with converted internal combustion hardware, slowing its initial electric push. In any event, Barra says that output of EV models such as the Hummer pickup, electric Cadillac Lyriq, Chevrolet Silverado pickup and Blazer SUV will take off this year.

To say the prices of battery metals are volatile would be an understatement. Cobalt, nickel, and lithium soared to extraordinary heights last year, but lately came crashing down. Having stable supplies would be a real boon for GM. They are far from alone here, as automakers, including Ford, have signed long-term mineral supply deals. Germany’s Volkswagen last year agreed to form a €3 billion jointventure with Belgium’s s Umicore for cathode materials. In 2021, Tesla struck a nickel deal with BHP, and a cobalt pact with Glencore, and in March that year got involved in a mining venture in New Caledonia.

The industry will surely be aware of the necessity to heed the warnings of Amnesty International, which has warned that mining is linked to environmental issues and claims of human rights abuses. In an era when environmental, social, and governance shortcomings carry severe reputational risks, GM could be exposing itself to criticism. Vale faced criticism after the collapse of the Brumadinho dam in Brazil, which killed 270 people and released toxic sludge into the environment. The accident caused Vale to lose its position as the biggest iron-ore producer, and sparked a company-wide safety and governance overhaul. Reparations continued to adversely affect its financial results years after the incident.

Several companies are looking for ways to reduce the environmental footprint of mining to minimize those ESG concerns. GM has invested in Controlled Thermal Resources, a startup working to extract lithium using renewable energy, and is backing Lithion, a Canadian startup that recycles EV batteries to reuse materials.

Despite its move into mining, GM has some catching-up to do on EVs, selling just under 40,000 EVs last year, finishing behind Ford and far short of market leader Tesla. Barra vows the company is just getting started, including with Chevrolet’s Equinox and Blazer models coming out this year, which start at around $30,000 and $40,000 to $45,000, respectively. Barra says that’s a very good deal.

U.S. steelmakers are bullish on 2023, with Cleveland-Cliffs forecasting an 8% growth in shipments to some 16 million tons, versus some 14.8 million tons in 2022. The 2023 selling price is forecast at some $115 per ton over that of 2022. Similar forecasts and price increases come from all the major U.S. steel companies.

Author profile: Royce Lowe, Manufacturing Talk Radio, UK and EU International Correspondent, Contributing Writer, Manufacturing Outlook. n