Lithium Americas has now partnered with General Motors in a joint venture named Thacker Pass which the U.S. Department of Energy has taken a 5 percent stake in making it one of the strategic government investments in the project that will produce the largest lithium source in the Western Hemisphere. The mining project in Nevada is going to generate 40,000 metric tons of battery-grade lithium carbonate each year by 2028, which is sufficient to serve 800,000 electric vehicles and see a massive improvement in the reliance of the American population on Chinese lithium processing.
Government claims a lithium future in America
The U.S Department of Energy has already become a 5% shareholder in Lithium Americas and, in a different project, 5% shareholder in the Thacker Pass joint venture Lithium Company with General Motors, which will be the largest source of lithium in the Western Hemisphere. The transaction is the most recent of the stringent number of private area financial commitments made by the Trump government over the years, following government acquisitions in Intel and MP Materials in a drive by the government to elevate those sectors it deems to be significant to national interest.
Lithium Americas shares listed in the US skyrocketed by 32.1% to 7.51% after the announcement. The Vancouver-based company has negotiated an agreement with the Energy Department to begin a first draw of 435 million out of an earlier stated amount of 2.26 billion government loan to enable the development of the Thacker Pass mine, which is already under construction and will open by 2028.
The strategic alliance guarantees a lithium supply chain in the home country
Investment in the mine last year by GM at 38 percent at a cost of 625 million will give them the right to purchase 100 percent of the mine in the first phase and a share in the second phase of the project. The new agreement will see the automaker permitting Lithium Americas to sell unallocated lithium production in the future to other parties.
The American mining investment is motivated by the dominance of China
Both Republicans and Democrats have discussed the Thacker Pass project as a means to increase the U.S. production of critical minerals and reduce dependence on China, the largest lithium processor in the world. Production in China is over 40,000 metric tons annually to making it the third largest producer after Australia and Chile. Its impact in refining is much more significant, as 75 percent of the world’s lithium is processed into battery-grade by the company.
America has a capacity of less than 5,000 metric tons of lithium that is manufactured at a Nevada factory owned by Albemarle. The initial stage of Thacker Pass will yield 40,000 metric tons of battery-grade lithium carbonate annually, which is an eight-fold improvement in the capacity of Americans in producing lithium.
Energy Secretary puts the focus on economic viability protection
Energy Secretary Chris Wright announced that it would make an equity stake by the government to make the work viable as China drives the prices down. According to Wright, the intervention by DOE will make the project economically viable and safeguard the taxpayers in terms of the loan package of 2.23 billion dollars. The Thacker Pass project is a groundbreaking event in terms of the dynamics of battery supply chains in the world, as America will take the lead to fight the domination of the lithium processing market by China.
This mine in Nevada has the capacity to produce 800,000 electric vehicles per year, which will turn the U.S. from a small producer of lithium to a significant supplier of battery material in the world market. The equity interest by the government is a long-term strategic control, as that of the GM, whose partnership secures the domestic automotive industry’s access to essential battery materials, thus insuring against foreign supply shocks.
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