The U.S. Department of Energy has taken equity stakes in the Canadian company Lithium Americas and its Nevada mining joint venture with General Motors. This action is part of a renegotiation of a federal loan.
Under the new terms, the U.S. government will acquire a five percent equity ownership in Lithium Americas and a five percent ownership in the Lithium Americas and General Motors joint venture. These equity stakes will be obtained through no-cost warrants, which are financial instruments that grant the government the right to purchase shares at a predetermined price.
The new terms resulted from a renegotiation with the DOE’s Loan Programs Office concerning a 2.26 billion dollar loan that was originally awarded to Lithium Americas under the Biden administration. Following this news, shares of Lithium Americas increased by thirty-four percent in after-hours trading.
The Department of Energy stated the equity stakes will act as additional collateral on the loan, which helps to reduce repayment risk for taxpayers. Lithium is a key chemical element used in the batteries for electric vehicles and smartphones.
Despite having some of the largest deposits, the United States currently produces less than one percent of the global lithium supply. U.S. Energy Secretary Chris Wright said in a press release that thanks to President Trump’s bold leadership, American lithium production is going to skyrocket. He stated the announcement helps reduce dependence on foreign adversaries for critical minerals by strengthening domestic supply chains and ensures better stewardship of American taxpayer dollars.
The announcement is the latest action by the Trump administration to take ownership stakes in companies. The administration has previously announced plans to take a ten percent stake in Intel and MP Materials, which operates a rare earth minerals mine in the United States.
Lithium Americas is developing the Thacker Pass mine in Nevada. The mine is expected to produce enough lithium to make as many as 800,000 electric vehicles per year in its first phase. President Trump approved the permit for this project in January 2021 at the end of his first term.
General Motors bought a thirty-eight percent stake in Lithium Americas last year for 625 million dollars. This purchase gave the automaker the right to buy the entirety of the first phase of production and to buy lithium from the mine for twenty years during the second phase. In total, that would be enough lithium for 1.6 million electric vehicles over the next two decades.