By Ernest Scheyder
(Reuters) -The U.S. Department of Energy has taken a 5% stake in Lithium Americas and a separate 5% stake in the company’s Thacker Pass joint venture with General Motors that is set to be the largest lithium source in the Western Hemisphere.
The deal, announced by Lithium Americas, marks the latest private sector investment by U.S. President Donald Trump’s administration. It follows U.S. government acquisitions in Intel and MP Materials, as the government attempts to boost industries it considers vital to U.S. national security.
U.S.-listed shares in Lithium Americas jumped 32% to $7.51 in premarket trading on Wednesday.
Last week, Reuters reported that administration officials were in discussions with Lithium Americas about an equity stake as they renegotiated the terms of a $2.26 billion government loan for the Nevada-based mining project.
EXERCISE PRICE OF A PENNY
The Vancouver-based company said it has finalised an agreement with the Energy Department to initiate the first $435 million draw from a previously announced $2.26 billion loan to support development of the Thacker Pass mine, which is under construction and set to open by 2028.
The U.S. government will acquire the stakes via warrants with an exercise price of a penny.
“We greatly appreciate the support of the administration, General Motors and our partners,” Jonathan Evans, CEO of Lithium Americas, said.
GM, which invested $625 million in the mine last year for a 38% stake, has the right to buy all of the project’s lithium from its first phase and a portion from the second phase for 20 years.
“We’re confident in the Thacker Pass project, which will reduce U.S. dependence on imported lithium and can support domestic manufacturing across many industries,” said Shilpan Amin, who oversees GM’s supply chain procurement.
Administration officials had initially sought a guarantee that GM would buy the metal regardless of market conditions, a request the automaker rebuffed and that led to the equity stake request, Reuters previously reported.
As part of the deal, GM will allow Lithium Americas to sell unallocated future lithium production to other parties. Lithium Americas has also agreed to fund a loan reserve account with $120 million within 12 months of the first draw on the loan.
Republicans and Democrats alike have touted the Thacker Pass project as a way to boost U.S. critical minerals production and cut reliance on China, the world’s largest lithium processor.
China produces more than 40,000 metric tons each year, making it the third-largest producer after Australia and Chile.
In refining, its influence is far greater as it processes over 75% of the world’s lithium into battery-grade material.
The U.S. produces less than 5,000 metric tons of lithium at a Nevada facility owned by Albemarle. Thacker Pass’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.
(Reporting by Ernest Scheyder, additional reporting by Angela Christy in Bengaluru; Editing by Chris Reese, Veronica Brown, David Gregorio, Sherry Jacob-Phillips and Barbara Lewis)
