The U.S. Department of Energy plans to lend Lithium Americas (LAC.TO) up to $2.26 billion to build Nevada's Thacker Pass lithium project, one of Washington's largest investments to date in the mining industry as part of a push to boost domestic production of critical minerals for the energy transition.
The loan, announced by the company on Thursday, is a key part of U.S. President Joe Biden's efforts to reduce dependence on lithium supplies from China, the world's largest processor of the key battery metal. The mine is slated to open later this decade and be a key supplier to General Motors (GM.N).
U.S.-listed shares of Lithium Americas rose 4.5% to close Thursday at $5.99. Shares had jumped more than 20% during intraday trading.
Initial construction at the site, just south of Nevada's border with Oregon, started in March 2023 after the company won a long-running and complex court case against conservationists, ranchers and Indigenous communities.
Once the loan closes, expected later this year after final environmental reviews, Vancouver-based Lithium Americas said it plans to start major construction, a process that will take three years. The mine's first phase is expected to produce 40,000 metric tons of battery-quality lithium carbonate per year, enough for up to 800,000 EVs.
The mine's cost has increased from a previous estimate of $2.27 billion to nearly $2.93 billion due to higher engineering costs, an agreement to use union labor, as well as the company's decision to build a housing facility for workers and their families in the remote region.
Under U.S. laws, the funds can be used for processing facilities, not the actual digging of the open-pit mine.
The loan, along with GM's $650 million investment last year that made it the largest Lithium Americas shareholder, should provide most of the money needed for the mine's first phase, the company said.
"We have an incredible opportunity to lead the next chapter of global electrification," said Jon Evans, the Lithium Americas CEO.
The project is expected to run at full capacity in 2028, aiming to eventually produce 80,000 metric tons per year. Lithium Americas aims to extract lithium at Thacker Pass from a large clay deposit, something that has never been done before at commercial scale.
To extract the lithium from that clay, the company will need to import sulfur to make sulfuric acid. As part of the mine construction, Lithium Americas plans to build a rail terminal roughly 60 miles (97 km) from the mine site to import sulfur and other materials.
The DOE loan, sanctioned under the Advanced Technology Vehicles Manufacturing loan program, includes an estimated $290 million of interest expected to accrue over a three-year period.
The project has received the support of some - but not all - Indigenous peoples in the region, including the Fort McDermitt Paiute Shoshone Tribe.
"Thacker Pass will provide important economic and employment opportunities for members of our tribe," said Larina Bell, the tribe's acting chairwoman.
Thacker Pass is strongly opposed by ranchers and conservationists, who fear it will hurt local water supplies and small plants and animals.
"This loan is nothing more than a handout to the mining industry," said John Hadder of Great Basin Resource Watch, a conservation group that lost its efforts to block the project in court.
Last year, the DOE made its first loan to a U.S. lithium company when it said it would lend Ioneer (INR.AX) up to $700 million to build its Rhyolite Ridge lithium project roughly 200 miles (322 km) north of Las Vegas.
