On Wednesday, Lithium Americas, a Vancouver-based company, announced that the US Department of Energy (DOE) has acquired a 5% stake in the company. 

Additionally, the DOE has taken a separate 5% stake in the Thacker Pass lithium project, a joint venture with General Motors.

Lithium Americas saw a significant premarket surge, with its US-listed shares climbing 31% to $7.48.

Lithium Americas has finalised an agreement with the DOE, enabling the first $435 million draw from a previously announced $2.26 billion loan, according to a Reuters report. 

This funding will support the development of the Thacker Pass site, though the total deal value remains undisclosed.

Strategic importance and US policy

This initiative represents the most recent private sector investment undertaken by the administration of US President Donald Trump. 

This move follows previous strategic acquisitions, including significant stakes in technology giant Intel and critical materials producer MP Materials. 

The overarching objective behind these investments is to bolster domestic industries that are considered crucial for US national security. 

By injecting capital and support into these sectors, the administration aims to strengthen the nation’s economic resilience, technological leadership, and self-sufficiency in areas vital to defense and critical infrastructure. 

This pattern of investment underscores a broader policy focus on safeguarding American interests through strategic economic intervention and fostering growth in key industries.

Last week, Reuters had reported that US administration officials are actively engaging with Lithium Americas. 

These discussions revolve around a potential equity stake, as both parties renegotiate the terms of a substantial $2.26 billion government loan. 

This funding is earmarked for a significant mining project in Nevada, which is poised to become the largest supplier of battery-grade lithium in the entire Western Hemisphere. 

This strategic move underscores the administration’s commitment to bolstering domestic critical mineral production and securing the supply chain for electric vehicle batteries, reducing reliance on foreign sources. 

The outcome of these negotiations will have considerable implications for the future of renewable energy infrastructure in the region.

GM role and global landscape

General Motors invested $625 million last year to acquire a 38% stake in the mine. 

This investment grants them the right to purchase all lithium produced from the project’s first phase and a portion of the lithium produced from its second phase for a period of two decades.

According to previous reports, administration officials initially requested a guarantee from General Motors to purchase the metal irrespective of market conditions. 

General Motors rejected this request, which subsequently led to the demand for an equity stake.

Both Republicans and Democrats have consistently promoted the Thacker Pass project as a vital initiative to increase US critical minerals production and decrease dependence on China, the leading global producer of lithium.

China holds a commanding position in the global lithium supply chain. 

While Beijing ranks as the third-largest lithium producer, behind Australia and Chile, with an annual output exceeding 40,000 metric tons, its influence is particularly pronounced in refining. 

China is responsible for processing over 75% of the world’s lithium into battery-grade material.

The US, through Albemarle’s Nevada facility, currently produces under 5,000 metric tons of lithium annually. 

However, the first phase of Thacker Pass is projected to yield 40,000 metric tons of battery-grade lithium carbonate each year, sufficient to power up to 800,000 electric vehicles.

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