The Queensland Pacific Metals Ltd (ASX: QPM) share price is taking off today after the company announced a strategic collaboration with electric vehicle-focused automotive giant General Motors Company (NYSE: GM).
General Motors will fork out up to $108 million for an equity stake in the battery metals-focused mineral developer.
The pair have also outlined a long-term offtake agreement. That will see the US-listed company snapping up all uncommitted nickel and cobalt sulphate produced at Queensland Pacific's TECH Project.
The Queensland Pacific Metals share price is surging on the news, gaining 18% to trade at 17.7 cents.
Let's take a closer look at the news driving the All Ordinaries Index (ASX: XAO) share higher today.
Queensland Pacific Metals rockets on General Motors deal
The Queensland Pacific Metals share price is surging on news the company has agreed to supply General Motors with battery-making materials.
General Motors expects to use the materials to produce Ultium battery cells for its electric vehicles.
The partnership will kick off with General Motors investing $31.4 million in the All Ords company.
That will see the car manufacturer buying 174.6 million shares for 18 cents apiece. It will also receive 46.8 million options with a 20-cent exercise price.
The cash will go towards the construction of the TECH Project, expected to kick off next year.
In return, the pair will commit to a 15-year offtake agreement for the first phase of the project. That will see General Motors snapping up around 6,000 tonnes of nickel and around 800 tonnes of cobalt per annum.
That will increase to around 16,000 tonnes and 1,800 tonnes respectively when Queensland Pacific Metals' other commitments are met.
General Motors has also agreed to participate in a capital raise conducted as part of the TECH Project's final investment decision (FID). That will see the automotive giant with offtake rights for the life of the project.
After that, the pair could commit to an additional yearly supply of around 16,000 tonnes of nickel and 1,800 tonnes of cobalt from the project's second phase expansion.
What did management say?
Queensland Pacific Metals managing director Dr Stephen Grocott said the company's "absolutely delighted" with the news driving its share price. He continued:
GM's strategic direction, company values and focus on sustainability in its pursuit of making electric vehicles for all is a perfect fit for Queensland Pacific Metals and our TECH Project.
GM's investment in our company and the associated offtake brings us one step closer towards construction of the TECH Project where we will one day aim to deliver the world's cleanest produced nickel and cobalt.
General Motors vice president of global purchasing and supply chain Jeff Morrison also commented:
The collaboration with Queensland Pacific Metals will provide GM with a secure, cost-competitive and long-term supply of nickel and cobalt from a free-trade agreement partner to help support our fast-growing EV production needs.
GM already has binding agreements securing all battery raw material supporting our goal of 1 million units of annual capacity in North America by the end of 2025.
This new collaboration builds on those commitments as we look to secure supply through the end of the decade, while also helping continue to expand the EV market.
Queensland Pacific Metals share price snapshot
Despite today's performance, the Queensland Pacific Metals share price has had a rough year so far.
Today's gains included, the stock has fallen nearly 3% so far this year. It has also dumped 30% since this time last year.
For comparison, the All Ordinaries has slumped around 14% year to date and 10% over the last 12 months.
