WASHINGTON, Jan 13 (Portal) – The US Department of Energy said on Friday it will loan ioneer Ltd (INR.AX) up to $700 million to build its Rhyolite Ridge lithium mining project in Nevada, a major step forward in the President Joe Biden’s plan to build a domestic electric vehicle supply chain.
Ioneer shares rose 16.3% to $16.30 on Friday afternoon in New York.
The loan, approved by Energy Secretary Jennifer Granholm, would be Washington’s first to mine a U.S. mining project for lithium, a key ingredient in making batteries for electric vehicles. It reflects the government’s growing concern that demand for the white metal could exceed supply without further investment, delaying efforts to tackle climate change.
“The government is sending a strong signal that it’s time to let us build this mine,” James Calaway, chief executive officer of ioneer, told Portal. “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 Advanced Technology Vehicles Manufacturing (ATVM) program office and is subject to approval and other factors. The funds would be used to construct a lithium carbonate processing facility at the Rhyolite Ridge site near an existing lithium operation operated by Albemarle Corp (ALB.N).
In an interview, Jigar Shah, head of the Department of Energy’s Loan Programs Office, called the Rhyolite Ridge project a step forward in US plans to increase lithium production. He added that he is “more than excited about the remaining pipeline” of companies that have applied for ATVM loans. The ioneer loan has a term of 10 years at a fixed interest rate, which is determined after the funds have been distributed.
A 2020 study had estimated the cost of the mine at about $785 million. Calaway said Australia-based ioneer needed to update that amount in light of recent inflation.
The mine would produce enough lithium to build 370,000 electric vehicles each year and reduce annual gasoline use by nearly 145 million gallons, the Department of Energy said.
Ford Motor Co (FN) and Prime Planet Energy & Solutions, a joint venture between Toyota Motor Corp (7203.T) and Panasonic Corp (6752.T), have agreed to purchase lithium from the project.
“Ford and Toyota and everybody else are waiting for us to have that built to supply lithium for the US,” Calaway said.
FLOWER
The formal phase of the project’s permitting process began last month after the US Fish and Wildlife Service designated Tiehm’s buckwheat, a rare flower at the project site, as an endangered species.
The company has said it believes it can develop the mine while protecting the flower. The Department of Energy said the loan is conditional on Ioneer completing the environmental assessment process.
“I was made aware of the buckwheat situation the first day I heard about the project,” Shah said. “It was part of our due diligence, and we wouldn’t have progressed unless we believed that (Ioneer) had a way to build the facility.”
The department also noted that ioneer changed its mine plan to avoid the buckwheat and spent more than $1 million on botanists, greenhouses, and related studies.
“The plant has the best chance if we take care of it,” Calaway said.
The Center for Biological Diversity (CBD), an environmental group opposed to the project, said it believes the company needs to move its mine at least 500 meters from one of the flowers. “The mine that the Department of Energy thinks it is funding is not the mine that will be built,” said Patrick Donnelly of the CBD.
Reporting by Ernest Scheyder in Houston and David Shepardson in Washington Editing by Matthew Lewis
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