U.S. Government Takes 5% Stake in Lithium Americas’ Nevada Mine Joint Venture with GM to Boost Domestic Lithium Production
The U.S. Department of Energy has secured equity interests in Canadian firm Lithium Americas and its joint venture with General Motors in Nevada, following a renegotiation of a federal loan.
Under the revised agreement, the U.S. government will hold a 5% stake in Lithium Americas and an identical share in the Lithium Americas-GM partnership. These equity interests are to be acquired through no-cost warrants, which grant the government the right to purchase shares at a predetermined price. The updated terms stem from renegotiations with the DOE’s Loan Programs Office concerning a $2.26 billion loan granted to Lithium Americas under the current administration.
Post-market trading witnessed a 34% surge in shares of Lithium Americas.
The DOE asserts that these equity interests will serve as additional security for the loan, thereby lessening the financial risk borne by taxpayers. Lithium is a vital chemical component used in the batteries of electric vehicles and smartphones.
U.S. Energy Secretary Chris Wright stated in a press release, “Despite possessing vast reserves, the United States accounts for less than 1% of global lithium production. Thanks to bold leadership under the current administration, American lithium production is poised for significant growth.” He further added, “Today’s announcement strengthens domestic supply chains and reduces our reliance on foreign adversaries for critical minerals, ensuring better fiscal stewardship of American taxpayer dollars.”
This latest move by the current administration marks another instance of acquiring ownership stakes in companies. Previous announcements include plans to own a 10% stake in Intel and MP Materials, which operates a rare earth minerals mine within the U.S.
Lithium Americas is developing the Thacker Pass mine in Nevada, projected to yield sufficient lithium for up to 800,000 electric vehicles annually during the initial phase. The project’s permit was approved by President Trump in January 2021, concluding his first term.
General Motors acquired a 38% stake in Lithium Americas last year, investing $625 million. This deal granted the automaker the option to purchase the entirety of the first phase of production and lithium from the mine for two decades during the second phase. In total, this would provide lithium for 1.6 million electric vehicles over the next two decades.
