Lithium Americas expects $2.3 billion US loan for lithium mine

Lithium Americas has received a conditional commitment from the US Department of Energy (DOE) for a $2.3 billion loan to help fund a lithium project the company is building near Thacker Pass in Humboldt County, Nevada. The DOE says the mine will reduce the US battery industry’s reliance on imported raw materials.

The Thacker Pass mine is expected to produce 40,000 metric tons (t) of lithium carbonate per year once it starts up in 2027—enough for the lithium-ion batteries in about 800,000 electric cars. Lithium Americas aims to eventually increase production to 80,000 t per year.

In January 2023, General Motors announced that it would invest $650 million in the project. GM will have the right to buy up to 40,000 t of the mine’s output for 15 years. Lithium Americas started site preparation in 2023, and major construction is expected to begin later this year, after the DOE loan closes. The loan is intended to pay for the mine’s lithium carbonate processing plant. The project must also pass an ennvironmental review before Lithium Americas gets the loan.

In a research note, David Deckelbaum, a financial analyst with TD Cowen, estimates that even with the DOE loan and the full GM investment, Lithium Americas will need to raise $266 million to fully fund the roughly $3 billion project.

Only one small lithium mine operates in the US today, an Albemarle facility in Silver Peak, Nevada. But several firms are seeking to open mines in the coming years, often with government support.

Albemarle has received DOE and Department of Defense grantsto help reopen a lithium mine in North Carolina that would produce enough ore for 50,000 t of lithium chemicals per year. Last year, the DOE gave the mining firm Ioneer a conditional commitment for a $700 million loanthat would partially fund another mine in Nevada. And Piedmont Lithium is applying for a DOE loan for its mine in North Carolina.

While a drop in lithium prices over the past year has caused some companies to delay expansion or construction of mining projects, the DOE expects the adoption of electric cars to increase lithium demand exponentially. The agency argues that its support of US lithium projects will strengthen the country’s battery supply chain and protect against disruptions caused by geopolitical competition, especially from China.

The size of Lithium America’s loan–the largest ever announced for a US lithium project–signals that the DOE is serious about increasing lithium production in the US, according to Chris Berry, president of the battery supply chain consultancy House Mountain Partners. “But the US has a long way to go before becoming a significant player,” he says. “The challenges that US-based developers face in terms of permitting, financing, and technology risks are significant.”