WASHINGTON (Reuters) – The U.S. Energy Department said on Friday it will lend to Ionair Inc (VAT in Indian Rupees)up to $700 million to build a Rhyolite Ridge lithium mining project in Nevada, a major step forward in President Joe Biden’s plan to develop a domestic supply chain for electric vehicles.
Shares of Ioneer rose 16.3% to $16.30 on Friday afternoon in New York.
The loan, approved by Energy Secretary Jennifer Granholm, would be the first by Washington for a US mining project for lithium, a key component used to make electric vehicle batteries. It reflects the government’s growing concern that demand for the white metal could outstrip supply without further investment, delaying efforts to combat climate change.
“The government is sending a strong signal that it’s time to let us build this mine,” James Callaway, chief executive of the company, told Reuters. “We now have the capital to build a very important facility to supply lithium to the United States.”
The loan has been under review for more than two years by the department’s Office of Vehicle Technology Manufacturing (ATVM) program and is contingent on permitting and other factors. The money will be used to build a lithium carbonate processing facility at the Rhyolite Ridge site near the existing lithium operation operated by Albemarle Corp. (ALB.N).
In an interview, Jigar Shah, head of the Department of Energy’s Office of Loan Programs, described the Rhyolite Ridge project as a step forward in US plans to increase lithium production. He added that he is “very excited about the remaining pipeline” of companies that have applied for ATVM loans. The ion loan will be for a period of 10 years at a fixed rate of interest once the funds are dispersed.
A 2020 study estimated the cost of the mine at approximately $785 million. Callaway said Australia’s Ioneer would need to update that amount in light of recent inflation.
The Energy Department said the mine would produce enough lithium to build 370,000 electric vehicles each year and reduce annual consumption of gasoline by about 145 million gallons.
Ford Motor Company (FN) and Prime Planet Energy & Solutions, a joint venture between Toyota Motor Corp (7203.T) and Panasonic Corp (6752.T)they agreed to buy lithium from the project.
“Ford and Toyota and everyone else is waiting for us to make this to supply the United States with lithium,” Callaway said.
Flower
The formal phase of the permitting process for the project began last month after the US Fish and Wildlife Service declared Tyhem’s buckwheat, a rare flower at the project site, an endangered species.
The company said it believed it could develop the mine while protecting Al-Zahra. The Energy Department said the loan was contingent on Ion completing the environmental review process.
“I learned about the buckwheat situation the first day I heard about the project,” Shah said. “It was part of our diligence, and we couldn’t have moved forward if we didn’t think (Aioner) had a path to building the facility.”
Management also noted that Aionair changed its mining plan to avoid buckwheat and spent more than $1 million on botanists, greenhouses, and related studies.
“The plant’s best chance is for us to take care of it,” Callaway said.
The Center for Biological Diversity (CBD), an environmental group opposed to the project, said it believed the company would need to move its mine back at least 500 meters from any of the flowers. “The Department of Energy believes the mine it is funding is not the mine to be built,” said Patrick Donnelly of the CBD.
(Reporting by Ernest Scheider in Houston and David Shepherdson in Washington Editing by Matthew Lewis
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