Energy Department moves ahead with deal to provide $2.3 billion in loan to Lithium Americas Corp. in a bid to boost domestic supplies of a mineral vital to the production of electric vehicles.
If finalized, the loan will help finance the construction of a lithium carbonate processing plant at Thacker Pass in Nevada. The plant will be adjacent to a mine site that contains the largest known lithium deposit in North America.
Demand for lithium, which is used in rechargeable batteries that power electric vehicles, has grown as more consumers move away from gas-burning cars and automakers ramp up production of cleaner vehicles. The United States, however, has lagged behind other countries in producing the metal. Almost 95 percent of the world’s lithium comes from just four countries: Australia, Chile, China and Argentina. Only 1 percent of the lithium used in the United States is harvested domestically, according to the Department of Energy.
Lithium carbonate from Thacker Pass could support the production of batteries for up to 800,000 electric vehicles annually, according to the Department of Energy. Administration officials also expect the project to create about 1,800 construction jobs and 360 operational jobs.
Energy department officials said the project would help strengthen the domestic supply chain for critical minerals, which they said is key to “achieving our ambitious clean energy and climate goals and reducing our dependence from economic competitors such as China.”
The country’s ability to meet the Biden administration’s goal of net zero emissions by 2050 will require wider adoption of electric vehicles, which can produce fewer or zero emissions. The administration wants electric vehicles to make up half of new car sales by 2030.
Jonathan Evans, chairman and CEO of Lithium Americas, said in a statement that the conditional loan commitment was a “significant milestone for Thacker Pass, which will help meet growing domestic demand for lithium chemicals and enhance the safety of our nation”.
The project is also backed by General Motors, which agreed in January 2023 to invest $650 million in the company to help develop the Thacker Pass mine. The company beat out 50 bidders, including battery and component makers, for the bet. Many Western auto executives have recently bypassed traditional suppliers and committed billions of dollars to deals with lithium mining companies to secure their supply of the metal.
The federal loan, along with General Motors’ investment, is expected to provide the vast majority of the capital needed to finance the first phase of the project, Lithium Americas officials said.
The mine project has previously come under scrutiny from Native American tribal members, ranchers and environmental groups because of its potential impact on groundwater and local wildlife habitat. The company began construction early last year after a federal court ruled in its favor and refused to overturn the decision to approve the project.
Lithium America officials said they have “close relationships” with the nearby Fort McDermitt Paiute and Shoshone Tribe. In 2022, the company entered into a binding agreement with the tribe to provide infrastructure improvements at Fort McDermitt, additional training and employment opportunities for tribal members.
“Thacker Pass will provide significant economic and employment opportunities for our tribal members,” said Larina Bell, acting chairwoman of the Fort McDermitt Paiute and Shoshone Tribe.
The conditional agreement was issued by the Department of Energy’s Office of Borrowing Programs, which marked a tenfold increase in its borrowing authority to more than $400 billion, from $40 billion, under the Inflation Reduction Act of 2022. Since its creation, the bureau has issued more than $42 billion in loans and loan guarantees.
Although the department intends to fund the project, the company must first satisfy certain “technical, legal, environmental and financial conditions” before the deal is finalized, according to the department.
