us government takes stake in canadian lithium miner and its nevada mining project

DOE Acquires Equity in Lithium Americas and GM Joint Venture

The U.S. Department of Energy (DOE) has established equity positions within Lithium Americas, a Canadian firm, and its collaborative mining operation with General Motors. This development stems from a revised agreement concerning a federal loan.

As per the revised stipulations, the U.S. government will secure a 5% equity share in both Lithium Americas and the Lithium Americas-GM joint venture. These stakes will be obtained through warrants, which are financial tools granting the government the option to acquire shares at a predetermined price.

Loan Renegotiation Details

The new terms arose during a renegotiation with the DOE’s Loan Programs Office regarding a $2.26 billion loan initially granted to Lithium Americas under the Biden administration. This adjustment aims to bolster the financial security of the loan.

Following the announcement, shares of Lithium Americas experienced a significant surge, increasing by 34% in after-hours trading.

Rationale for Equity Stakes

The DOE stated that these equity holdings will function as supplementary collateral for the loan. This measure is intended to mitigate repayment risks for taxpayers. Lithium is a crucial chemical element essential for the production of batteries used in electric vehicles and smartphones.

U.S. Energy Secretary Chris Wright commented, “Despite possessing some of the world’s largest lithium deposits, the United States currently generates less than 1% of the global lithium supply. Thanks to President Trump’s bold leadership, American lithium production is going to skyrocket.”

He further added, “This announcement serves to diminish our reliance on foreign entities for vital minerals by reinforcing domestic supply chains and ensuring responsible management of American taxpayer funds. President Trump pledged to achieve both, and he is fulfilling that promise.”

Broader Trend of Government Ownership

This announcement represents the latest instance of the Trump administration taking ownership stakes in private companies. Prior initiatives include plans to acquire a 10% stake in Intel and MP Materials, a U.S.-based rare earth minerals mining operation.

Thacker Pass Mine and GM's Investment

Lithium Americas is currently developing the Thacker Pass mine in Nevada. This mine is projected to yield sufficient lithium to support the manufacturing of up to 800,000 electric vehicles annually during its initial phase.

The project received permit approval from President Trump in January 2021, nearing the conclusion of his first term.

Last year, GM invested $625 million to obtain a 38% stake in Lithium Americas. This investment grants the automaker exclusive rights to the initial phase of production and secures a 20-year lithium supply agreement from the mine during the second phase.

Collectively, this would provide enough lithium to power 1.6 million electric vehicles over the next two decades.