The U.S. Energy Department announced on Friday that it will provide a loan of up to $700 million to Ioneer Ltd for the construction of the Rhyolite Ridge lithium mining project in Nevada. This is a significant advancement in President Biden’s strategy to establish a domestic electric vehicle supply chain. Ioneer’s shares rose 16.3% to $16.30 on Friday afternoon in New York.
The loan, authorized by Energy Secretary Jennifer Granholm, will be the first provided by the U.S. government for a lithium mining project in the country. Lithium is a crucial component in the production of electric vehicle batteries. This loan indicates a growing government concern that the demand for lithium could surpass supply without further investment, hindering efforts to address climate change.
“The government is sending a strong signal that it’s time to let us go build this mine,” James Calaway, ioneer’s executive chairman, told Reuters. “We now have the capital to build a very important facility to supply lithium for the United States.”
The loan, which is still under review by the Advanced Technology Vehicles Manufacturing (ATVM) program office after more than two years, is dependent on obtaining permits and other requirements. If approved, the funds would be used to construct a lithium carbonate processing plant at the Rhyolite Ridge location, near a current lithium operation run by Albemarle Corp.
Jigar Shah, head of the Energy Department’s Loan Programs Office, stated in an interview that the Rhyolite Ridge project is a progress in the U.S. plans to increase lithium production. He expressed enthusiasm for the upcoming pipeline of companies that have applied for ATVM loans. The loan to ioneer, an Australia-based company, will have a 10-year term with a fixed interest rate determined once the funds are distributed. A study from 2020 estimated the cost of the mine at around $785 million, which will need to be revised due to recent inflation, according to Calaway.
According to the Energy Department, the mine is projected to produce enough lithium to manufacture 370,000 electric vehicles annually, and it would decrease yearly gasoline consumption by almost 145 million gallons. Ford Motor Co and Prime Planet Energy & Solutions, a partnership between Toyota Motor Corp and Panasonic Corp, have committed to purchasing lithium from the project.
“Ford and Toyota and everyone else are waiting for us to get this built to supply lithium for the U.S.,” Calaway said.
The permitting process for the project officially began last month when the U.S. Fish and Wildlife Service classified Tiehm’s buckwheat, a rare flower found at the project location, as an endangered species. ioneer has stated that they believe they can develop the mine while preserving the flower. The loan from the Energy Department is dependent on ioneer successfully completing the environmental review process.
“I was made aware of the buckwheat situation the first day I heard about the project,” Shah said. “It was part of our diligence, and we wouldn’t have moved forward if we didn’t think (ioneer) had a path to building the facility.”
