Stillwater Mining to supply palladium for GM cars again

General Motors Co. is renewing ties with a Montana mining company that provides precious metals for emission-reducing catalytic converters, according to documents filed Thursday with federal regulators.

The deal restores a decade-long relationship that turned sour after GM filed for bankruptcy protection and abruptly dropped its supply agreement with Stillwater Mining Co.

That move in July 2009 drew a sharp backlash from Montana's congressional delegation and its Democratic governor, Brian Schweitzer.

They criticized the Detroit automaker — then majority owned by the U.S. government — for abandoning an American company in favor of cheaper foreign suppliers.

"It just makes sense for GM to get back in the business of buying from American companies because American taxpayers saved GM," Montana Sen. Jon Tester, also a Democrat, said Thursday.

Stillwater operates the only platinum and palladium mines in the U.S., southwest of Billings in the Beartooth Mountains. Both metals are used in catalytic converters, although palladium is cheaper.

Terms of the new deal released Thursday show the company will provide palladium to GM for three years beginning in January. The price will be based on the market average at the time of the sale.

The deal lacks ceiling and floor prices — a feature in past contracts but one that the automaker cited in part as a reason to cut ties last year.

Greg Wing, Stillwater's chief financial officer, indicated that strong precious metal prices gave Stillwater the confidence to agree to the new terms. He said the company has $200 million in cash on its balance sheet as added financial security.

"We kind of made peace with (GM) a while back and we're obviously moving ahead," Wing said.

GM spokesman Daniel Flores said it was company policy not to discuss terms of agreements with suppliers.

Another Stillwater contract with Ford Motor Co. expires at the end of the year. Wing said Stillwater is in discussions with automakers about future contracts but declined to offer details.

The renewal of its relationship with GM caps a string of good news for Stillwater after it was battered over the past two years by low metals prices.

In November, the company announced plans to spend $68 million on the expansion of its mines, located near the towns of Nye and McLeod. Days later, the company closed its purchase of a Canadian company with substantial platinum and palladium reserves in a deal valued at $140 million to $160 million.

The company's former majority stockholder, Russia's Norilsk Nickel, sold its stake in the Montana company this month for about $900 million.

From the Montana mines Stillwater expects to produce between 475,000 and 485,000 ounces of precious metals in 2010, down about 10 percent from last year.

Stillwater shares fell 6 cents to close Thursday at $20.65. GM shares fell 11 cents to $34.81.

General Motors Co. is renewing its ties to a Montana mining company that provides precious metals for emission-reducing catalytic converters, according to documents filed with federal regulators Thursday.

The deal restores a decade-long relationship that turned soured after GM filed for bankruptcy protection and abruptly dropped its supply agreement with Stillwater Mining Co.

That move in July 2009 drew a sharp backlash from Montana's congressional delegation and its Democratic governor, Brian Schweitzer.

They criticized the Detroit automaker — then majority owned by the U.S. government — for abandoning an American company in favor of cheaper foreign suppliers. Stillwater executives asked a federal judge to block the move but were denied.

"We kind of made peace with (GM) a while back and we're obviously moving ahead," said Greg Wing, Stillwater's chief financial officer.

Stillwater operates the only platinum and palladium mines in the U.S., southwest of Billings in the Beartooth Mountains.

Terms of the new deal released Thursday show the company will provide palladium to GM for three years beginning in January. The price will be based on the market average at the time of the sale.

The deal lacks ceiling and floor prices — a feature in past contracts but one that the automaker cited in part as a reason to cut ties last year.

Wing said strong precious metal prices gave Stillwater the confidence to agree to the new terms. He said the company has $200 million in cash on its balance sheet as added financial security.

Another contract, with Ford Motor Co., is due to expire at the end of the year. Wing said Stillwater is in discussions with automakers about future contracts but declined to offer details.

The renewal of its relationship with GM caps a string of good news for Stillwater after it was battered over the past two years by low metals prices.

In November, the company announced plans to spend $68 million on the expansion of its mines, located near the towns of Nye and McLeod. Days later, the company closed its purchase of a Canadian company with substantial platinum and palladium reserves in a deal valued at $140 million to $160 million.

Stillwater's former majority stockholder, Russia's Norilsk Nickel, sold its stake in the Montana company this month for about $900 million.

Stillwater shares rose 4 cents to $20.75 in midday trading Thursday. GM shares fell 1 cent to $34.91.