DOE re-thinks $2.2B Thacker Pass lithium loan

The Trump administration is reportedly having second thoughts on a Biden-era $2.2-billion loan for Lithium Americas’ (TSX, NYSE: LAC) Thacker Pass project in Nevada, according to Bloomberg News. 

The loan would have provided most of the funding to build a processing plant for the project that seeks to develop one of the largest lithium deposits in North America. General Motors (NYSE: GM) last year invested US$625 million to acquire a 38% stake in the project.

But the Department of Energy (DOE) is now reviewing the loan after Greg Beard, a senior adviser in the department’s Loan Programs Office, said Thacker Pass might not draw many customers while cheaper lithium produced in China is available, Bloomberg reported on Monday, citing the Washington Free Beacon.

National security concerns

“We think this might be a sign that the U.S. government is shifting priority away from funding critical minerals needed for the energy transition and increasingly focusing on critical minerals needed for national security and military applications,” BMO Capital Markets analysts Helen Amos and George Heppel said in a note on Tuesday.

Shares in Lithium Americas were down 4.6% to $4.35 apiece on Tuesday morning in Toronto, for a market capitalization of $911 million. The stock has traded in a 12-month range of $3.21 to $7.22.

Thacker Pass could produce 40,000 tonnes of battery-quality lithium carbonate per year in the project’s first stage, enough for up to 800,000 electric vehicles. The project hosts proven and probable mineral reserves of 14.3 million tonnes of lithium carbonate equivalent (LCE), at an average grade of 2,540 parts per million, the largest lithium resource in North America, according to a resource update in January.

New offtake deal

The department is now proposing that GM sign a binding offtake deal for Thacker Pass’ production over the next 20 years, which would amount to hundreds of millions more dollars in addition to the $625 million it has already committed, The Beacon reported.

The DOE is working to ensure limited taxpayer resources are used for the best interests of Americans and to see a return on investment, it said in a statement reported by The Beacon.

GM meanwhile, said the DOE loan is a required part of the project’s financing, according to Bloomberg.

‘Working with DOE’

“We cannot comment on the details of ongoing discussions with the Department of Energy and General Motors regarding the first draw on our loan agreement,” Tim Crowley, Lithium Americas’ Vice President of Government and External Affairs told The Northern Miner in an emailed statement. “We remain in active discussions with the DOE and our partner, GM, and will provide an update at the appropriate time.”

The Thacker Pass review is part of a wider DOE evaluation of financing done through its $400-billion green bank, initially launched under the Biden administration.

Prices of battery-grade lithium carbonate jumped about 20% one month ago after Chinese battery producer Contemporary Amperex Technology (CATL) suspended production at its Jianxiawo lithium mine in Jiangxi province. The price rose to 85,492 yuan ($12,000) per tonne on Aug. 20, before easing over the following weeks after CATL resumed production. It now sits at $10,200 per tonne, according to The Wall St. Journal.