Trump administration seeks equity role in largest US lithium project
The Trump administration is re-evaluating a $2.3bn Department of Energy (DoE) loan granted to Lithium America’sThacker Pass lithium project with General Motorsunder the Biden administration. The revised terms could see Washington take a direct equity stake in Lithium Americas, reported at ~10%.
The US is racing to bolster domestic critical mineral mining and processing to reduce its strategic dependencies on China, highlighted by Beijing’s export controls on rare earth elements vital to the US defence sector at the height of recent trade tensions between the two countries. This prompted thePentagon to sign a landmark multibillion-dollar partnership with Nevada-based rare earth developer MP Materials (MP), establishing a precedent for federal equity participation in domestic mining projects.
The buildout of the US lithium sector has been hampered by low prices, which has left financing as the central bottleneck in the project development cycle. High capital costs make it difficult to fund US projects solely through the private sector. However, should Washington begin taking equity positions in domestic lithium projects, it would help to de-risk the sector and unlock private capital, despite the current downcycle.
This sentiment was reflected in the immediate market response: Lithium Americas’ share price rose nearly 90% on the news, with investors interpreting Washington’s involvement as an endorsement of its strategic importance. Other US lithium developers also recorded share price gains, fuelled by speculation that government intervention could extend to other projects across the US lithium sector.
Politics at play?
By taking direct equity stakes, Washington ensures domestic lithium projects are not only funded but also controlled by US interests, despite potential shareholder dilution. It is part of a wider play from the Trump administration to take direct equity stakes in sectors considered critical to US national security, which includes MP Materials and the recent 10% stake in chipmaker Intel.
Photo courtesy of Lithium Americas
Politics is also at play. President Trump has been vocal in his criticism of loans granted under the Biden administration, promising equity stakes in return for taxpayer dollars. Instead of being a passive lender, the US government could enjoy upside exposure from growing EV battery sector demand – evenas US demand projections are downgraded on Trump’s broader rollback of clean energysubsidies.
Photo courtesy of Lithium Americas
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