Item 1A. Risk Factors 34
Item 1B. Unresolved Staff Comments 61
Item 1C. Cybersecurity 61
Item 2 Properties 61
Item 3. Legal proceedings 61
Item 4. Mine Safety Disclosure 61
Item 6. [Reserved] 62
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 85
Item 8. Financial Statements and Supplementary Data 87
Item 9A. Controls and Procedures 88
Item 9B. Other Information 89
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 89
PART III 89
Item 10. Directors, Executive Officers and Corporate Governance 89
Item 11. Executive Compensation 90
Item 14. Principal Accountant Fees and Services 90
Item 15. Exhibits and Financial Statement Schedules 91
Signatures 93
i
EXPLANATORY
NOTE AND DEFINITIONS
On November 21, 2023, Stardust Power Operating Inc (f/k/a Stardust Power Inc. prior to the
consummation of the Business Combination, “Legacy Stardust Power”) entered into a business combination agreement (the “Business
Combination Agreement”) with Global Partner Acquisition Corp II (“GPAC II”), a Cayman Islands exempted company incorporated
on November 3, 2020, Strike Merger Sub I, Inc. (“First Merger Sub”), a Delaware corporation and direct wholly owned subsidiary
of GPAC II, and Strike Merger Sub II LLC (“Second Merger Sub”), a Delaware limited liability company and direct wholly owned
subsidiary of GPAC II. On July 8, 2024, former Stardust Power Inc. was renamed Stardust Power Operating Inc.
On
July 8, 2024, Legacy Stardust Power completed the business combination contemplated by the Business Combination Agreement (the “Business
Combination”). GPAC II deregistered as a Cayman Islands exempted company and domesticated in the State of Delaware as a Delaware
corporation. As per the Business Combination Agreement, First Merger Sub merged into Legacy Stardust Power, with Legacy Stardust Power
being the surviving corporation. Legacy Stardust Power then merged into Second Merger Sub, with Second Merger Sub being the surviving
entity. Upon the completion of the Business Combination, GPAC II was renamed Stardust Power Inc. (also referred to herein as the “Combined
Company” or “Stardust Power”).
Unless
the context otherwise indicates, references to “us,” “we,” “our,” “ours,” “Stardust
Power,” the “Company” and “Registrant” refer to Stardust Power Inc. and its wholly owned subsidiaries.
All monetary values, other than per unit and per share amounts, are stated in millions of U.S. dollars unless otherwise specified. The
following are other abbreviations and definitions of certain terms used within this Annual Report on Form 10-K (this “Form 10-K”
or this “report”):
“BGLC”
refers to battery-grade lithium carbonate.
“BIL”
refers to the Bipartisan Infrastructure Law.
“Board”
refers to the Company’s Board of Directors.
“Bylaws”
refers to the Company’s bylaws.
“Certificate
of Incorporation” refers to the Company’s amended and restated certificate of incorporation.
“Common
Stock” refers to the Company’s common stock, par value $0.0001 per share.
“DLE”
refers to direct lithium extraction.
“DOE”
refers to the Department of Energy.
“EVs”
refers to electric vehicles.
“Exchange
Act” refers to the Securities Exchange Act of 1934, as amended.
“Facility”
refers to Stardust Power’s planned lithium refinery in Muskogee, Oklahoma.
“FEL”
refers to Front End Loading.
“Governing
Documents” refers to the Bylaws and Certificates of Incorporation.
ii
“IGX”
refers to IGX Minerals LLC.
“IR
Act” refers to the Infrastructure Investment and Jobs Act.
“IRA”
refers to the Inflation Reduction Act.
“IT”
refers to information technology.
“KMX”
refers to KMX Technologies, Inc.
“Primero”
refers to Primero USA, Inc.
“Project
Area” refers to the 66-acre tract in Muskogee, Oklahoma where the Company plans to construct the Facility.
“Public
Warrants” refers to the Company’s detachable redeemable warrants and distributable redeemable warrants.
“Sarbanes-Oxley
Act” refers to the Sarbanes-Oxley Act of 2002, as amended.
“SEC”
refers to the Securities and Exchange Commission.
“Securities
Act” refers to the Securities Act of 1933, as amended.
“Sponsor”
refers to Global Partner Sponsor II LLC.
“Sumitomo” refers to Sumitomo Corporation of Americas
“TAM”
refers to total addressable market.
“tpa”refers
to tons per annum.
iii
Cautionary
Statement Regarding Forward-Looking Statements
Certain
statements in this Annual Report on Form 10-K may constitute “forward-looking statements” for purposes of the federal securities
laws. Our forward-looking statements include, but are not limited to, statements regarding our and our management team’s expectations,
hopes, beliefs, intentions, or strategies regarding the future. In addition, any statements that refer to projections, forecasts, or
other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The
words “anticipate,” “believe,” “can,” “contemplate,” “continue,” “could,”
“design,” “estimate,” “expect,” “intends,” “leading,” “may,”
“might,” “objective,” “plan,” “possible,” “potential,” “predict,”
“project,” “shall,” “should,” “target,” “will,” “would” and
similar words or expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is
not forward-looking. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as—and
must not be relied on by any investor as—guarantees, assurances, predictions, or definitive statements of fact or probability.
Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances
are beyond the control of Stardust Power Inc. (the “Company” or “Stardust Power”). Forward-looking statements
in this Annual Report on Form 10-K may include, for example, statements about:
● our failure to realize the anticipated benefits of the Business Combination;
● the liquidity and trading of the Common Stock and the Public Warrants;
● the Company’s future financial performance;
● the Company’s ability to manage future growth;
● the Company’s ability to operate in the lithium industry;
● the effects of competition on the Company’s business;
● market demand for and uses of lithium-based end products;
● future global, regional, or local economic and market conditions;
● the development, effects and enforcement of laws and regulations;
If
any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by
these forward-looking statements. There may be additional risks that we do not presently know or that we currently believe are immaterial
that could also cause actual results to differ from those contained in the forward-looking statements.
In
addition, forward-looking statements reflect our expectations, plans or forecasts of future events and views as of the date hereof.
We anticipate that subsequent events and developments will cause our assessments to change. However, while we may elect to update these
forward-looking statements at some point in the future, we specifically disclaim any obligation to do so except as otherwise required
by applicable law. These forward-looking statements should not be relied upon as representing our assessment as of any date subsequent
to the date hereof.
These
statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements. As a result of a number of
known and unknown risks and uncertainties, actual results or our performance of the Company may be materially different from those expressed
or implied by these forward-looking statements.
You
should read this Annual Report on Form 10-K and the documents that we reference in and have filed as exhibits to this Annual Report on
Form 10-K completely and with the understanding that our actual future results may be materially different from what we expect. We qualify
all of our forward-looking statements by these cautionary statements.
iv
ITEM
1. BUSINESS
Unless
the context otherwise requires, all references in this section to “we,” “us,” “our,” the “Company”
or “Stardust Power” refer to Stardust Power Inc. and its subsidiaries. Some of the information contained in this section
or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes
forward-looking statements that involve risks and uncertainties. Our principal executive offices are located at 15 E. Putnam Ave, Suite
378, Greenwich, CT, and our main telephone number at that location is (800) 742-3095.
Company
Overview and History
Stardust
Power, formed on March 16, 2023, is developing a lithium refinery at our Facility in Muskogee, Oklahoma, with planned capacity of
producing up to 50,000 metric tons per annum of BGLC once fully operational. On
March 16, 2023, Roshen Pujari (hereinafter Roshan Pujari), the sole director and a controlling member of Stardust Power LLC, transferred
his ownership in Stardust Power LLC to Legacy Stardust Power. in exchange for nominal consideration. Prior to and following the acquisition,
Roshan Pujari controlled both Stardust Power LLC and Legacy Stardust Power. The Company’s predecessor entity, Stardust Power LLC,
did not have any assets, liabilities, revenue, expenses or cash flows from its inception on December 5, 2022, through March 16, 2023.
On March 16, 2023, Stardust Power Inc. was organized in the State of Delaware and all the ownership interests of Stardust Power LLC
were transferred to Stardust Power Inc. At the closing of the Business Combination
(“Closing”), pursuant to the Business Combination Agreement, the Business Combination between GPAC II, First Merger Sub,
Second Merger Sub and Legacy Stardust Power was consummated after which Stardust Power emerged as the surviving company. The name of
GPAC II was subsequently changed to Stardust Power Inc. As a development stage company, Stardust Power’s strategy is to
advance its project through site acquisition and readiness, source feedstock, and obtain commitment for the offtake of its
BGLC.
Stardust
Power’s mission is to secure U.S. energy leadership for national security through the production of battery grade lithium, with
sustainability built into each step of its process.
Stardust
Power’s battery-grade lithium refinery is being designed and developed to foster energy independence for the United States.
The Company seeks to become a sustainable, cost-effective supplier of BGLC for energy storage across e-mobility, grid
infrastructure, and data centers. The Facility will be optimized for multiple inputs of lithium source material, including
concentrated lithium brine, lithium chloride, technical and crude lithium feedstocks. Upon completion of the facility,
Stardust Power expects to secure multiple sources of feedstock from various lithium producers, with the Facility becoming one of the
largest lithium refineries in North America. Stardust Power intends to enter into letters of intent and memoranda of understanding
to avail itself of lithium brine feedstock supply. Stardust Power’s business strategy will depend on such agreements and its
ability to source lithium brine.
Stardust
Power will source lithium feedstock from various suppliers and may make investments upstream to secure additional feedstock.
However, there is uncertainty related to whether and how much economically recoverable lithium exists at such resources and as such
the possibility exists that these efforts may not yield desired economic results. For more information on associated risks, please
see “Risk Factors - We face numerous risks related to exploration, construction, and extraction of brine by our
suppliers.” The Company will seek to sell its products to and for the benefit of battery manufacturers, the United
States’ defense industrial base, and Western original equipment manufacturers (“OEMs”). The Company is not
currently producing or selling any BGLC.
Some
of the key driving factors for potential growth of the lithium refining industry are the anticipated increasing demand for
battery-grade lithium products, fueled largely by the anticipated demand and production of EVs. We anticipate Western automotive
OEMs and battery manufacturers to increasingly seek domestic supply sources. In turn, we believe this has led to increasing demand
for the critical minerals used in battery cells, such as lithium, driven by strong governmental incentives for American
manufacturing and an evolving geopolitical climate that is creating a national security priority for the United States’
market. For more information on the demand of EVs and battery-grade lithium, please see “Current United States Lithium
Refinery Landscape-EV Market Driving Demand for Lithium” below. Stardust Power’s market is the United States’
domestic market, which has been estimated in terms of lithium carbonate equivalent to be at 321,000 tons in 2030, 438,000 tons in
2031, 583,000 tons in 2035, respectively, and increasing to 629,000 tons by 20401. For more information,
please see the graph in “United States Market - Lithium Battery Landscape” below.
In
February 2023, the Company (through its fully owned subsidiary, Stardust Power LLC) received an illustrative incentive analysis for up
to $257 million in performance-based incentives, based on Stardust meeting certain criteria, from the State of Oklahoma (covering Phase
1 and 2) and potential federal incentives, which may also be further eligible for federal grants. For more information on the incentives
and milestones required to be achieved in order to receive such incentives, please see “State Incentives” below.
On January 10, 2024, Stardust Power and the City of Muskogee entered into a Purchase and Sale Agreement (“the
PSA”) to purchase the site in Southside Industrial
Park, Muskogee, Oklahoma in Port Muskogee for a total of $1,662,030. On December 16, 2024, the Company completed the purchase and acquired
title to the land.
Lithium
Industry
Competition
and Industry Overview
The
global market for lithium is being driven primarily by the development and manufacturing of cathode active material for lithium-ion batteries.
Cathode material capacity and production is currently concentrated in Asia, particularly China, Japan and Korea.
In
the coming years, significant cathode material production capacity is expected to come online in Europe and North
America while capacity and production in China, Japan, Korea also increases. The market for lithium compounds faces barriers to
entry, including access to an adequate and stable supply of lithium feedstock, the need to produce sufficient quality and quantity,
technical expertise and development lead time.
China’s
Dominance in Lithium-ion Batteries and the Need for Domestic Sources in the United States
Lithium-ion
batteries have become the rechargeable battery of choice in cell phones, computers, electric vehicles, and large scale electric stationary
storage systems. Global production capacity of lithium-ion batteries was approximately 2.8 terawatt-hours (“TWh”)
per year at the end of March 2023 and is forecasted to grow to approximately 6.5 TWh in 2030, led by China, which is projected
to account for more than half the market share, alongside North America and Europe, each projected to produce over 1 TWh of lithium-ion
battery capacity, according to S&P Global Market Intelligence.2 This is supported by regulatory and consumer-driven tailwinds
increasing demand for power-consumption through higher performance applications. This, in turn, is driving the need for resilient and
geographically diverse sources of battery metals and precursor materials, including lithium.
The
battery supply chain can be separated into three segments:
● upstream (mining and extraction of raw materials);
● midstream (processing of raw materials into battery-grade components); and
The
supply chains for the critical minerals in these batteries differ in terms of the geography of raw material production, although a few
countries produce the majority of supply for each critical mineral. Arguably the most important choice is the selection of cathode material,
as cathodes are over half of the cost of a battery cell and largely determine crucial battery characteristics such as energy density
and charging speed.4
Chemical
refiners source battery-grade materials from suppliers to manufacture into cell components, including cathodes, anodes, electrolytes,
and separators. The majority of global refining capacity is currently located in Asia.5
Cell
manufacturers source cell components and assemble those components into modules and packs, which are then sold to OEMs. Cell manufacturing
is currently concentrated in China, with the country accounting for over 77% of global cell manufacturing capacity, as of 2022, and estimated
at 69% in 2027.6
Each
segment of the lithium-ion battery supply chain has seen disparate quantities of investment, with those variations further pronounced
with specific geographies. While there is significant cell manufacturing and OEM manufacturing capacity in the United States, a minority
of global battery materials, particularly as they relate to EVs, are sourced from inside the United States resulting in a severe domestic
capacity imbalance. 7 This risk in the security, and cost of supply has resulted in numerous issues for industries reliant
on lithium-ion batteries and has the potential to setback the adoption of EVs and renewable energy storage. As a result, Stardust Power
intends to focus its business strategy on the United States’ domestic production of refining BGLC utilizing federal and state government
incentives, in addition to public and private market investments.
Current
United States Lithium Refinery Landscape
The
United States lithium refinery landscape is rapidly evolving, with significant developments underway to bolster domestic
capabilities in lithium production, crucial for battery-grade materials used in EVs and other technologies. Here is an overview of notable projects and how Stardust Power aligns:
Competitive
Landscape and New Market Entrants
The
United States lithium refining sector is seeing increased activity, partly driven by government policies such as the Inflation
Reduction Act, which incentivizes domestic production. New players like Stardust Power are entering the market, positioning
themselves through strategic initiatives such as mergers and joint ventures to fund their development. Existing firms like Albemarle
are expanding their operations to capitalize on the growing demand for lithium, driven by the EV market expansion.
Stardust
Power’s Position Relative to Competitors
Stardust
Power is positioning itself as a key player in the domestic supply chain for lithium, a critical material for battery production. By
seeking to establish one of the largest refineries of its kind in the United States, Stardust Power aims to enhance its competitive
edge and market visibility. Its strategic location in Oklahoma, provides a centralized hub by which we intend to
leverage existing industrial and shipping infrastructure, aligning logistically with upstream sources of feedstock and downstream
customers.
Unlike
the hard rock lithium refineries of the other United States players in the industry, the Company’s central refinery is being
designed to be optimized for multiple lithium brine inputs. By utilizing a “hub and spoke” refinery model, the Company
believes it can scale production more efficiently through sourcing feedstock from different sources. This provides a potential
competitive advantage of minimizing the dependence on a single supply source.
Future
Outlook
The
United States lithium refining industry is expected to grow significantly, with continued investments and expansions, given the continuing political support towards onshoring of critical mineral production in United States. The entry of new
players like Stardust Power indicates a dynamic shift towards increasing domestic production capabilities. This trend is likely to continue
as the demand for lithium-ion batteries escalates and the United States seeks to reduce its reliance on foreign critical minerals.
In
summary, the United States lithium refinery sector is on a robust growth trajectory, with significant investments from both new entrants
like Stardust Power and established players. This expansion is crucial for supporting the broader energy transition and EV market growth
in the United States.
8https://www.reuters.com/business/autos-transportation/tesla-plans-produce-lithium-1-mln-vehicles-texas-refinery-elon-musk-2023-05-08/
9
https://www.reuters.com/markets/commodities/exxon-aims-make-key-lithium-technology-decision-by-year-end-2024-02-15/#:~:text=The%20company%20last%20fall%20announced,electric%20vehicle%20(EV)%20batteries.
10https://www.ioneer.com/rhyolite-ridge-project/about-rhyolite-ridge/
11https://lithiumamericas.com/news/news-details/2024/Lithium-Americas-Provides-a-Thacker-Pass-Construction-Plan-Update/default.aspx#:~:text=PROJECT%20TIMELINE,full%20capacity%20production%20in%202028.
Overall
Market Opportunity
The
lithium market is expected to grow significantly through 2030 as a result of the electrification of cars and the growth in the energy
storage segment. Due to the strict rules that internal combustion engine automakers must adhere to in order to reduce carbon dioxide
emissions from automobiles, the automotive application market is estimated to increase significantly over the course of the projection
period. This has led to the increased focus on EVs by automakers, which in turn is expected to increase demand for lithium and related
goods. A typical EV battery would require about 850 grams of BGLC per kilowatt-hours (“kWh”)12, and each EV has
an average battery capacity of 50 kWh. Hence, an average EV will require approximately 40 kg of BGLC13. Given that its refinery
will be able to produce up to 50,000 metric tpa of BGLC, Stardust Power estimates they will be able to supply approximately 1.2 million
EVs which is estimated to contribute to approximately 10%-11% of the United States’ EV market by 2035, estimated at 11 million
EVs.14
Furthermore,
the growing lithium-ion battery market is expected to benefit from the continued advancement of DLE technologies, further described
below, which may enhance the industry’s ability to respond promptly to rising demand.
In
light of the Company’s objective to emerge as a significant supplier of BGLC within the United States, it is estimated that a portion
of the global lithium market constitutes the Company’s TAM.
Additionally,
the substantiation for this belief stems from market analysis and industry trends indicating the growing demand for BGLC, particularly
within the context of the expanding EV market and advancements in energy storage solutions. Given the pivotal role of BGLC in powering
EVs and supporting renewable energy integration, the projected growth trajectory of the lithium product market substantiates the Company’s
focus on this segment as its TAM. Furthermore, the Company’s strategic positioning and expected operational capabilities aimed
at servicing the United States’ market reinforce the viability of targeting this segment within the broader global lithium market.
Additionally, the market impact of the Facility may be assessed from the demand side by calculating the units of EVs that can be supplied
by the plant.
EV
Market Driving Demand for Lithium
According
to BloombergNEF’s 2023 Long-Term Electric Vehicle Outlook (“BNEF EV 2023”), under the Economic Transition Scenario
(“ETS”) 15, the EV adoption in global passenger vehicle sales may increase from 14% in 2022 to 30% by 2026.
Additionally, the global fleet of passenger electric vehicles is expected to increase from 27 million in 2022 to approximately 107 million
units in 2026, approximately 245 million units in 2030, and approximately 731 million units by 2040, representing a penetration rate
of 7.6%, 16% and 46%, for the years 2026, 2030 and 2040, respectively, of all passenger vehicles on road 16.
According
to EV Volumes, 2023 global light-duty EV (Battery Electric Vehicles and Plug-in Hybrid Electric Vehicles) sales increased approximately
35% as compared to 2022. Global light-duty EV adoption increased from approximately 13% in 2022 to approximately 16% in 2023; China’s
light-duty EV adoption increased from approximately 27% in 2022 to approximately 34% in 2023.17 We believe the strong EV demand
growth in 2023 was driven by automakers’ increased product offering, increased consumer awareness and adoption, national and regional
governments’ announced incentives, subsidies, and more stringent fuel economy/carbon dioxide emissions regulations to support electrification
efforts.
In
2024 and beyond, fuel economy/carbon dioxide emissions regulations for commercial vehicles coupled with environmental commitments of
an increasing number of corporations are likely to propel electric commercial vehicle sales. According to BNEF EV 2023, for commercial
vehicles18, road freight demand is estimated to increase by 46% globally from 2022 to 2040. Under the ETS, light-duty commercial
vehicles are estimated to electrify rapidly, propelled by existing favorable total cost of ownership as compared to diesel vans. By 2030,
more than a third of all new sales are estimated to be electric, increasing to approximately two-thirds by 2040. Further, under the ETS,
battery electric buses are estimated to represent 65% of global fleet by 2040. Additionally, electric light-duty commercial vehicle sales
are estimated to increase to approximately 6 million vehicles in 2030 and to approximately 15 million vehicles by 2040, electric medium-and
heavy-duty commercial vehicle sales are estimated to increase to approximately 1 million vehicles in 2030 and to approximately 2.5 million
vehicles by 2040, and electric bus sales are estimated to increase to approximately 0.17 million vehicles in 2030 and to approximately
0.23 million vehicles by 204019.
Lithium
Market Current Dynamics
The
global lithium market has recently experienced substantial price decreases. Spot prices peaked at over $80,000 per ton in December 2022
but have since declined to just over $10,345 per ton as of March 2025, representing a decrease of over 88%.20
This downturn, attributed to oversupply and softened demand, raises concerns for industries reliant on lithium-ion batteries, such
as EVs, renewable energy storage, consumer electronics and refineries. The decline may have implications for the industry and for Stardust
Power.
Despite
current price declines, the ongoing escalation in energy demand and the diversification away from over-reliance on fossil fuels
suggests continued rising demand for lithium-powered energy sources over the long term. S&P Global forecasts stabilization in
lithium carbonate prices within a range between $20,000/mt and $25,000/mt from 2024 to 2027.21
18 BloombergNEF. “Electric Vehicle Outlook 2023” dated 2023.
Future
Lithium Supply
Currently,
most of the lithium mining is situated in Australia and Latin America followed by China. An announced pipeline
of projects will likely introduce new players and geographies to the lithium-mining map. This reported capacity base is projected to
be enough for supply to grow at a 20% annual rate to reach over 2.7 million metric tons of lithium carbonate equivalent by 2030.22
While
forecasted demand and supply indicates a balanced industry for the short term, there is a potential need to galvanize new capacity by
2030. Additional lithium sources required to bridge the supply gap are predicted to come from different types of lithium sources. The
three lithium sources, of these novel types of lithium sources, which will create the greatest portion of Stardust Power’s feedstock
are from (i) salt flats (ii) produced water and (iii) geothermal brines.
The
Domestic Market in the United States
Lithium-Battery
Landscape
Current
and projected demand is dominated by EVs, but lithium-ion batteries also are ubiquitous in consumer electronics, critical defense
applications, and in stationary storage for the electric grid. We believe EVs have changed the domestic economy in irreversible
ways. With the increasing electrification of the United States’ transportation sector, growth in employment associated with
EVs has already been demonstrated. In the United States,23 EV sales reached a market share of 7.6% in 2023, and
according to some estimates, that figure could increase to a 67% gap over the next decade.24 Since the IRA passed in
2022, companies have invested $85 billion in new EV and battery manufacturing and supply chain facilities in the United States,
resulting in 82,000 new United States jobs, according to data from the EV Jobs Hub. While estimates vary, Bloomberg projects
worldwide sales of 56 million passenger EVs in 2040, of which 17% (about 9.6 million EVs) will be in the United States’
market. If all batteries for Bloomberg’s projected 9.6 million EVs were manufactured abroad, that would result in roughly $100
billion in imports. Capturing this market is key for the future viability of the United States auto industry, which historically has
contributed 5.5% of the total United States’ gross domestic product. In addition to the EV market, grid storage uses of
advanced batteries are also anticipated to grow, with Bloomberg projecting total global deployment to reach over 1,095 GW by 2040,
growing substantially from 9 GW in 2018.25 To participate in the lithium-based battery market, the United States needs a
robust supply chain, upstream, midstream and downstream to produce state-of-the-art, reliable EV and grid storage batteries at
scale. Stardust Power is intending to capture a portion of the midstream market through the development of its lithium
refinery.
Sources:
Benchmark Market Intelligence, S&P Global, Project Blue, Goldman Sachs, Companies websites; Hatch Analysis
According
to the Benchmark Mineral Intelligence Source, the lithium industry needs to invest $116 billion by 2030 if the world is to meet the ambitious
targets set by governments and the largest automakers. The analysis’s high case scenario, which encompasses data from the International
Energy Agency on enacted country-level policies, would require 5.3 million tons of lithium carbonate equivalent in production today,
which could result in supply shortages, potential causing an increase in lithium
prices.26
Current
and Future Market Structures
Market
Trends and Opportunities
Currently,
the United States’ market for lithium-ion batteries, or alternative rechargeable battery chemistries, can be delineated into the
commercial and the national defense markets. While these markets are distinct in their end-use applications and requirements, they are
alike in their need for innovation and research and development. Successful domestic production and reliable supply chains in both markets
will be key for the United States’ economic competitiveness and security.
United
States’ Economic Posture
Bloomberg
forecasts 3.2 million EV sales in the United States for 2028, and over 200 GW of lithium-ion battery-based grid storage deployed
globally by 2028.27 With an average estimated EV battery capacity of 100 kWh, 320 gigawatt-hours
(“gWH”) of domestic lithium-ion battery production capacity will be needed just to meet passenger EV demand.28
Benchmark Mineral Intelligence forecasts domestic lithium-ion battery production capacity of 148 GWh by 2028, less
than 50% of projected demand.29 These projections indicate threats to the ability of the U.S. to serve domestic
demand. In this scenario, domestic supply chains for the transportation, utility, and aviation sectors may become vulnerable or beholden
to strategic competitors for key technologies.
National
Security Posture
The
increasing demand for lithium products and their importance to advanced technologies and energy infrastructure highlights the national
security urgency of the current domestic import dependence. In October 2024, China banned the export of lithium batteries to U.S. drone
producers, including producers of military drones, and without any alternative, those domestic producers were forced to begin rationing
batteries and tempering sales to Ukraine.30 The defense industrial base requires reliable and secure advanced energy storage
technologies for many of its most sensitive technologies, including drones. This means domestic BGLC production is vital for not only
commercial competitiveness but national security.
On President Trump’s first
day of his second term in office, on January 20, 2025, his administration published an executive order proclaiming a national state of energy
emergency. Within the executive order, the White House defined critical minerals as “energy”, then explicitly referenced
the importance of refining stating that “insufficient energy production, transportation, refining, and generation constitutes an
unusual and extraordinary threat to our Nation’s economy, national security, and foreign policy.”31
Lithium Technologies
Direct Lithium Extraction
DLE is a concentrating
technology that will occur near the lithium source and precedes the lithium refining process being developed for our refinery in
Oklahoma. We anticipate partnering with third-party DLE providers for this capability. DLE technologies aim to efficiently
concentrate lithium brines found in naturally occurring salt flats, geothermal reservoirs, and oilfield produced water. Use of DLE
technology replaces the need for traditional evaporation ponds. There are various forms of DLE technology, including
adsorption-based, ion-exchange, membrane-separation, or solvent-extraction. Use of DLE, when compared to traditional evaporation
ponds for brine, offers several advantages such as reducing the environmental footprint, shortening production timelines, increasing
lithium recovery rates, minimizing freshwater usage, and enhancing product purity. Currently, only adsorption-based DLE has been
implemented at commercial scale (in Argentina and China). Scaling up DLE technologies may significantly improve lithium production
efficiency, lower operating costs, and improve sustainability. Stardust Power has entered into letters of intent with DLE suppliers
to evaluate their technologies and will continue to evaluate prospective partners in the space.
Incentives Through the IRA and BIL
The IRA signed into law by
then President Biden in August 2022 has several provisions intended to stimulate domestic demand for EVs and motivate producers to
shift their battery supply chain to North America. The bill extends availability of the $7,500 credit on the purchase of new EVs and
eliminates the cap on the number of cars that can qualify. The IRA also provides that, starting January 1, 2024, to be eligible, a
vehicle must not only be built in North America, but its battery must be comprised of at least 40 percent of materials sourced in
North America or a United States trading partner. Each year that percentage rises by 10 percent until by 2027 whereby it reaches 80
percent of the battery materials. Given China’s preeminent position in the battery supply chain currently, the IRA may be a
strong motivation for battery manufacturers to locate in North America, increasing demand for BGLC from North American sources.
Additionally,
the DOE has committed $3 billion to bolster the domestic EV supply chain in alignment with the BIL. Despite increased mining
efforts, it is projected that the United States will still rely on imports for lithium production in the next five to ten years. The
BIL intends to incentivize sourcing of critical minerals from countries with U.S. free trade agreements. Within the BIL, the federal
government aims to allocate approximately $370 billion over the next decade to facilitate the clean-energy transition.
Giga
Factories in the United States
The
global gigafactory market is expected to grow at a CAGR of 18.03% from 2023 to 2028, driven by the increasing adoption of EVs.32 Competition
for gigafactory investments is intensifying, with global capacity projected to expand tenfold by 2030. This is mostly due to Giga
factories’ ability to produce batteries at GWh levels; a 1 GWh factory can produce enough batteries for 17,000
automobiles.
Given
that global capacity is expected to expand by ten times from its 2020 level by 2030, competition for gigafactory investment is expected
to intensify at a significant rate.33
In
the United States, the DOE forecasts the operation of 13 new battery cell gigafactories by 2025 in the United States, marking a significant
shift in battery manufacturing.34 This development positions the United States as a prominent hub for EV production. The
IR Act has further spurred investments in North American EV supply chains. The IEA’s recent report reveals that between August
2022 and March 2023, major EV and battery manufacturers announced a cumulative investment of $52 billion in North American EV supply
chains.35
Our Strategy
Stardust Power looks to become a leading producer
of BGLC in the United States. Our approach is to establish a large central refinery, optimized for multiple inputs of brine lithium feedstock.
Sustainability is a core focus at every level of operations, from how feedstock is sourced to the use of renewable energy at the refinery.
We are limiting air emissions through the electrification of production lines and preserving water through the implementation of zero
liquid discharge (“ZLD”) technologies, recycling water, among others.
Developments in the domestic market impact the Company in the following
ways:
The key components of Stardust Power’s business strategy are as follows:
The
Site
Purchase
and Sale Agreement
On
January 10, 2024, Stardust Power and the City of Muskogee entered into the PSA to
purchase the site in Southside Industrial Park, Muskogee, Oklahoma in Port Muskogee for a total of $1,662,030.
On
December 16, 2024, the Company completed the purchase and acquired title to the land. Stardust Power and the City of Muskogee entered
into a Development Agreement which calls for the Company to (i) commence the construction of the Facilities within 12 months from
January 10, 2024, and (ii) diligently proceed to completion without unreasonable delays, but subject to construction delays and interruptions
due to occurrences of Force Majeure, as defined in the PSA. Commencement of construction is to include the development of plans and specification
for the Facilities and the start of dirt work for the Facility.
The
PSA further calls for the City of Muskogee to aid Stardust Power in its development of its lithium refinery by using commercially reasonable
efforts to facilitate discussions between the Company and the Muskogee City-County Port Authority (the “Authority”)
regarding the Company’s procurement of such agreements with the Authority as may be appropriate regarding the use of the Port Muskogee,
which may include, without limitation barge, rail storage and truck capabilities to access and transport goods and supplies to and from
the Facility at Port Muskogee.
Also,
Port Muskogee will assist the Company with the exploration of incentives, grants and other funding opportunities to improve access to
the property, with a focus on the following specific improvements and the goal that they may be completed prior to the estimated completion
of the Facility: (i) upgrading and improving West 53rd Street to provide a second entrance to the site, and (ii) extending rail service
to the site.
The
Company believes that the secured site at Southside Industrial Park within the Port Muskogee, and Oklahoma in general, is an ideal location
for its Facility. The geographic location of Oklahoma is advantageous from a supply and offtake perspective. Oklahoma is a legacy energy
producer and has favorable industrial regulations. Port Muskogee has been designated by the United States’ Customs and Border Protection
as a Foreign Trade Zone, which reduces costs and increases potential operating income, providing port industries a competitive advantage
in meeting global supply chain demands. Port Muskogee is dedicated to investing in its community and announced a $58 million investment
in infrastructure improvements in January 2023.36 Stardust Power anticipates these improvements could increase its operational
efficiency, improve resiliency to weather events, and support continuous growth with increased multi-modal throughout the terminal area.
Port
Muskogee has robust workforce and education systems in place. It has 24 post-secondary institutions within 60 miles (including four post-secondary
institutions within Muskogee County) more than 2,140 post- secondary programs offered within 60 miles, and over 14,377 post-secondary
completions annually within 60 miles. The Muskogee Center for Workforce Excellence focuses on manufacturing by deploying resources, leveraging
existing programs, and aligning with local and regional employment demand. The state has a highly skilled workforce in the oil and gas
engineering sector that can be trained for lithium refinery operations.
The
site has access to the largest inland waterway system in America, a strong interstate highway network, and rail lines. The City of Muskogee
has begun the process of creating a tax increment financing district (“TIF”) to complete infrastructure improvements including
a rail line to the west of the property and West 53rd Street to the north up to industrial access grade creating an Industrial Truck
Corridor from State Highway 64 to State Highway 69. The proposed multimillion dollar TIF was designed for the benefit of the Company.
Stardust Power intends to occupy 66 of the 260 acres at Port Muskogee, excluding creeks.
Site
Due Diligence
Extensive
site due diligence, including: a critical issues analysis (“CIA”), a Phase I Environmental Site Assessment (“ESA”),
a Geotechnical Study, Cultural Survey, Logistics Study, and a readiness assessment, has been conducted.
Critical
Issues Analysis
On
behalf of Stardust Power, certain legal counsel and ENERCON Services Inc. conducted a CIA of land cover, water resources, biological
resources, protected lands, and a review of regulatory and permitting considerations for a proposed lithium refinery in the Project
Area. The Cultural Resource Project Area consists of a 0.6-km buffer surrounding the Project Area, (originally the proposed 81 acres,
from which the 66 acres was carved out). This CIA provides a broad, yet comprehensive overview of the key environmental resources identified
during preliminary project planning and includes a review of publicly available background information, regulatory constraints, and risks.
The CIA further provides recommendations, such as additional work that might be necessary or prudent for further evaluation and/or mitigation
of potential risks to each resource before project implementation.
Phase
1 Environmental Site Assessment
ENERCON
was retained to perform a Phase I ESA of the Project Area during September and October of 2023. This assessment has revealed no evidence
of Recognized Environmental Conditions (“RECs”), Controlled RECs, Historical RECs, or Vapor Encroachment Conditions
in connection with the Project Area.
On
the SW Muskogee, OK Quadrangle Map (USGS 2018), creeks and ponds are mapped on the subject property. During site reconnaissance, ENERCON
observed dry creeks located near the northwestern and southeastern corners of the subject property. ENERCON reviewed the online National
Wetland Inventory mapper for additional information regarding the on-site surface waters. No significant data gaps were encountered.
As
per ENERCON’s suggestion, the delineation of the wetlands was executed by the Company by excluding the risk areas from the Purchase
and Sale Agreement, which resulted in the purchase of 66 acres of land by the Company. See “The Site - Purchase and Sale Agreement.”
Geotechnical
Study
On
February 19, 2024, ENERCON delivered a report in support of the construction of the proposed lithium processing plant. The report concluded
that physiographic, topographic, hydrologic, soil, and subsurface structural conditions are suitable for the construction of a lithium
processing plant within the Project Area in Muskogee County, Oklahoma.
Readiness
Assessment
The
site was evaluated as part of the Readiness Assessment performed by Hatch, which was completed on October 11, 2023. Hatch also conducted
a scoping study, completed on April 17, 2024, where Hatch reviewed the Site from a business and technical perspective, including using
multi-nodular logistics. Following a preliminary review, the presently held view is:
● Stardust Power appears to have identified certain key permitting requirements.
● Lack of process water discharge may simplify permitting.
This
early-stage view is based on incomplete information now available, as well as numerous assumptions and considerations, and is subject
to change.
Oklahoma
Gas and Electric Substation Feasibility
On
January 31, 2024, Stardust Power and Oklahoma Gas & Electric entered into an Electric Service Will Serve Agreement (the “OG&E
Agreement”) in which OG&E has agreed to sell Stardust Power electricity at the site contingent upon OG&E performing
engineering and design services, including procurement of materials and/or equipment, to determine the costs of providing electricity
at the site. These costs shall be paid by Stardust Power through a Minimum Bill Agreement, which shall be entered into at a future date.
Currently, construction power exists on the site suitable to take the project to the next phase. The OG&E Agreement will be reviewed and renegotiated if necessary, pending the conclusions from the FEL-3 Report.
The
term of the OG&E Agreement is effective until the execution of the definitive Minimum Bill Agreement.
Value
Chain
Stardust
Power is establishing its business to deliver value with a strong focus on the midstream refinement process and an intention to minimize
risk in its business model by partnering with experts across the value chain. The Company seeks to be a diversified player, with upstream
and downstream integration in the future, in partnership with their industry partners.
Supply
Feedstock
The
central refinery is being designed to be optimized for multiple lithium brine inputs. By utilizing a “hub and spoke”
refinery model, the Company believes it can scale production more efficiently through sourcing lithium brine feedstock from
different sources. This limits risk of dependence on a single type of feedstock. It also differentiates Stardust Power from other
lithium refineries which are in the process of being constructed in the United States. The Company’s strategy is to source
supply from multiple sources which may include feedstock from (i) salt flats, (ii) geothermal brines, and (iii) produced water.
Additionally, Stardust Power is also able to intake technical or crude grade lithium for its conversion process.
In
the ordinary course of business, Stardust Power has entered into non-binding letters of intent and memorandums of understanding in order
to secure feedstock. The following is a description of certain non-binding letters of commitments to which we are a party.
IRIS