Lithium Americas' Bold Move: Splits into Two Amidst Intense US-China Tensions

US: Lithium Americas Corp. has revealed that its proposed company division was primarily motivated by the complex US-China relations. In November, the mining firm announced plans to bifurcate its Argentine and North American units into two distinct entities, subject to approval from shareholders. The move would serve as a means of distancing itself from Ganfeng Lithium Group Co., a Chinese producer of Lithium and one of Lithium Americas' top shareholders. Since collaborating with Lithium Americas in 2017 to drive forward projects in Argentina, Ganfeng's position has become a complicated one.

Ganfeng has been a committed and intelligent partner. However, to successfully develop the Thacker Pass mine in Nevada and advance the United States' ambition of building a domestic supply chain for electric vehicles, Lithium Americas must sever ties with Ganfeng. General Motors Co. has invested $650 million in this project. Lithium Americas has recently sought funding from the US Department of Energy, which has earmarked significant funds for battery-metals initiatives.

It is believed that the ownership of Department of Energy funds by Chinese shareholders is problematic from an optics standpoint. The US and its allies are taking measures to limit Chinese investment in mining to compete with China for access to critical minerals. As part of this effort, Lithium Americas' anticipated separation, which is expected to be completed this year, coincides with the Canadian government's mandate for three Chinese companies to divest their stakes in the country's Lithium miners.