Big Automakers Grab $1 Billion Deal for Urgently Needed Battery Metals

livemint.com:

The world’s largest automakers are moving deeper into the supply chain for metals to power their electric cars. A $1 billion deal set to close in the coming weeks highlights the urgency of their effort and the risks they are taking to get there. Volkswagen and Jeep maker Stellantis are each committing $100 million in a complicated transaction that will create a publicly traded mining company producing nickel and copper from two Brazilian mines that run on hydropower.

They are joining with a special-purpose acquisition company run by a well-known mining executive who hopes to do more deals to build a large battery-metals company. Mining giant Glencore is also putting in $100 million and has agreed to turn the nickel and copper from the mines into battery-grade material at processing facilities in Western Europe and North America that would qualify for subsidies in the U.S. and Europe.

Investors are showing enthusiasm for the deal. Shares of the London-based SPAC, known as ACG Acquisition, are up despite a deep chill in that market. ACG executives are currently doing a roadshow to raise money from professional investors before a shareholder vote later this month, they said.

The transaction highlights desperation to secure raw materials outside China, the world’s dominant processor of battery metals. Many automakers are seeking materials from mines that meet higher environmental and labor standards, in part to qualify for billions of dollars in electric-car tax credits, loans and subsidies in the U.S., Canada and Europe. In recent months, General Motors invested $650 million in a startup lithium producer, Stellantis put $155 million into an Argentina copper mine, and Ford invested in an Indonesia nickel mine.