Stellantis invests more than $100 million in California lithium project

Vulcan Energy Resources

17/08/2023 11:00

By Ernest Scheyder
       Aug 17 (Reuters) - Automaker Stellantis  STresLAM.MI 
said it would invest more than $100 million in California's
Controlled Thermal Resources, its latest bet on the direct
lithium extraction (DLE) sector amid the global hunt for new
sources of the electric vehicle battery metal.
    The investment by the Chrysler and Jeep parent announced on
Thursday comes as the green energy transition and U.S. Inflation
Reduction Act have fueled concerns that supplies of lithium and
other materials may fall short of strong demand forecasts.
    DLE technologies vary, but each aims to mechanically filter
lithium from salty brine deposits and thus avoid the need for
open pit mines or large evaporation ponds, the two most common
but environmentally challenging ways to extract the battery
metal. 
    Stellantis, which has said half of its fleet will be
electric by 2030, also agreed to nearly triple the amount of
lithium it will buy from Controlled Thermal, boosting a previous
order to 65,000 metric tons annually for at least 10 years,
starting in 2027.
    "This is a significant investment and goes a long way toward
developing this key project," Controlled Thermal CEO Rod Colwell
said in an interview. 
    The company plans to spend more than $1 billion to separate
lithium from superhot geothermal brines extracted from beneath
California's Salton Sea after flashing steam off those brines to
spin turbines that will produce electricity starting next year. 
    That renewable power is expected to cut the amount of carbon
emitted during lithium production.
    Rival Berkshire Hathaway  BRKa.N  has struggled to produce
lithium from the same area given large concentrations of silica
in the brine that can form glass when cooled, clogging pipes.
    Colwell said a $65 million facility recently installed by
Controlled Thermal can remove that silica and other unwanted
metals. DLE equipment licensed from Koch Industries would then
remove the lithium. 
    "We're very happy with the equipment," he said. "We're going
to deliver. There's just no doubt about it."
    Stellantis CEO Carlos Tavares called the Controlled Thermal
partnership "an important step in our care for our customers and
our planet as we work to provide clean, safe and affordable
mobility."
    Both companies declined to provide the specific investment
amount.
    Controlled Thermal aims to obtain final permits by October
and start construction of a commercial lithium plant soon
thereafter, Colwell said. Goldman Sachs  GS.N  is leading the
search for additional debt and equity financing, he added.
    Controlled Thermal had separately agreed to supply lithium
to General Motors  GM.N  by 2024, but that goal has been pushed
to 2025, Colwell said.
    GM said it has a "close working relationship" with
Controlled Thermal but deferred comment on technical questions
to its junior partner. GM added it believes it has enough raw
material supply to reach its target of producing 1 million EVs
by 2025. 
    Stellantis also has an investment in Vulcan Energy Resources
 VUL.AX , which is developing a German DLE project. 

 (Reporting by Ernest Scheyder; Editing by Jamie Freed)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))