425: Stardust Power Aims to Secure Domestic Lithium Supply with Refinery and GPAC Merger

Stardust Power is leveraging partnerships to establish a domestic, sustainable supply of battery-grade lithium, aiming to meet growing US demand and reduce reliance on foreign sources.

Summary

• Stardust Power is focused on producing battery-grade lithium domestically, emphasizing sustainability.
• The company's refinery is being optimized for multiple lithium brine outputs to secure US supplies.
• Global lithium demand is projected to reach 3.5 million tonnes by the end of the decade.
• The US currently produces approximately 20,000 tonnes per annum (tpa) of battery-grade lithium.
• Stardust Power's refinery could potentially satisfy up to 10% of domestic lithium demand.
• The company's investment is expected to create hundreds of jobs.
• Stardust Power has an excellent relationship with the State of Oklahoma and has been provided with an analysis of incentives up to $257m.
• China dominates the lithium market with up to 85% refinery capacity.
• Stardust Power is developing a large-scale lithium refining capacity of American, IRA-compliant battery-grade lithium.
• The company aims to recycle wastewater from oil & gas producers for lithium chloride production.
• Stardust Power seeks to complete its merger with GPAC this summer.
• A definitive feasibility study is expected by the end of the year or early next year.
• The anticipated production of battery-grade lithium is 50,000 tonnes per annum (tpa), achieved through two trains each with a 25,000 tpa capacity.
• Sustainability is a key consideration, with a focus on brine feedstock, fully electric production trains, zero liquid waste discharge, and sustainable power sources.

Sentiment

Score: 7

Explanation: The document presents a positive outlook for Stardust Power's plans to establish a domestic lithium supply chain, emphasizing sustainability and potential economic benefits. However, it also acknowledges risks associated with the merger and the competitive landscape.

Positives

• Stardust Power's focus on domestic lithium production aligns with US energy transition goals and reduces reliance on imports.
• The refinery's potential to supply up to 10% of domestic lithium demand is a significant contribution.
• The project is expected to create hundreds of jobs, stimulating local and national economies.
• The company's commitment to sustainability, including using brine feedstock and aiming for zero liquid waste discharge, is environmentally positive.
• The potential to recycle wastewater from oil & gas production creates new revenue streams for those producers and provides a sustainable feedstock source.
• The company has an excellent relationship with the State of Oklahoma and has been provided with an analysis of incentives up to $257m.

Negatives

• The US currently lags significantly behind China in lithium refinery capacity, with China holding 85% of the market.
• The project is still in the development phase, with the definitive feasibility study not expected until the end of the year or early next year.
• The merger with GPAC is subject to various risks and conditions, including shareholder approval and regulatory approvals.

Risks

• The proposed business combination may not be completed in a timely manner or at all.
• Failure to satisfy the conditions to the consummation of the proposed business combination, including shareholder approval and regulatory approvals.
• The effect of the announcement or pendency of the proposed business combination on the Company's business relationships and employee retention.
• Changes to the proposed structure of the business combination may be required.
• The ability to implement business plans and forecasts after the completion of the proposed business combination.
• Volatility in the competitive and highly regulated industries in which the Company plans to operate.
• The impact of the global COVID-19 pandemic.

Future Outlook

Stardust Power aims to complete its merger with GPAC this summer and finalize its definitive feasibility study by the end of the year or early next year, while continuing to aggregate feedstock opportunities and support resilient American supply chains.

Management Comments

• Stardust Power's mission is to be committed to producing battery-grade lithium products while incorporating sustainability into each step of its process.
• Once completed, the Stardust Power refinery could satisfy up to 10% of the domestic lithium demand, making it a significant domestic manufacturer.
• By souring our feedstock from American markets and manufacturing domestically, we can present geopolitics from disruption to our supply chain.
• Stardust Power can recycle wastewater for the production of lithium chloride to be used as a feedstock for our battery grade products, creating new lines of revenue in the energy transition for oil & gas producers.
• By aggregating supply, we can scale production of battery-grade lithium products faster and more efficiently, limiting the risk of dependence on single assets.
• Sustainability is built into each step of our process.

Industry Context

This announcement highlights the growing importance of securing domestic lithium supplies in the US, driven by increasing demand for electric vehicle batteries and concerns about reliance on foreign sources, particularly China. The focus on sustainable production methods also reflects a broader industry trend towards environmentally responsible mining and refining practices.

Comparison to Industry Standards

• The document mentions Albermarle and Livent as early lithium producers in America, producing approximately 20,000 tpa.
• Stardust Power's planned production of 50,000 tpa would be a significant increase compared to current US production levels.
• China's dominance in lithium refining, with 85% of global capacity, underscores the need for increased domestic capacity in the US.
• The document highlights the advantage of brine feedstock over hard rock mining due to lower environmental impact, aligning with industry trends towards sustainable practices.

Stakeholder Impact

• Shareholders: Potential for increased value through the merger and successful lithium production.
• Employees: Creation of hundreds of jobs.
• Customers: Access to a secure and sustainable supply of battery-grade lithium.
• Suppliers: Opportunities to provide feedstock and other resources to the refinery.
• Creditors: Potential for increased business and revenue through financing the project.

Next Steps

• Effectuate merger with GPAC this summer.
• Complete definitive feasibility study by the end of the year or early next year.
• Continue to aggregate feedstock opportunities.

Key Dates