tax credit rules for EVs
The Biden Administration has officially finalized its tax credit rules for electric vehicles (EVs). One of the provisions outlined in the new rules is a restriction on sourcing critical minerals used in EV batteries from "foreign entities of concern," meaning countries like China.
This includes lithium from most countries because the conversion to Lithium Hydroxide mostly happens in China.
But Canada is NOT a foreign entity of concern. And the plan with Mitsubishi is to mine the PAK project (high grade and low iron, and likely 1 million tons when fully defined) , produce spodumene concentrate AND produce chemical grade lithim hydroxide. This makes total sense for the NA supply chain for many reasons. EV and battery production are being ramped in US and in Canada. It is much more efficient but also less risky from geopolitical stance to have that supply chain less dependent on adversaries and unstable countries. Then there is the tax credit element.
The deal with Mitsubishi gives them access to capital to move to production. In the current environment that is incredibly important for a microcap resource company with a depressed share price in a high interest and tight lending environment. They cannot get enough mney by issuing cheal shares and they cannot borrow it either. They can get it by partnering with Mitsubishi (and maybe also having other offtake agreements for the partnership) as the project develops.