WASHINGTON, Jan 13 (Reuters) – The US Energy Department said on Friday it would lend up to $700 million to Ionair Ltd (INR.AX) to build its Rhyolite Ridge lithium mining project in Nevada, part of President Joe Biden’s plan It’s a big step. To develop a domestic electric vehicle supply chain.
Ioneer shares were up 16.3% at $16.30 in New York Friday afternoon.
The loan, which was approved by Energy Secretary Jennifer Granholm, would be the first by Washington to fund a US mining project for lithium, a key ingredient used to make electric vehicle batteries. It reflects growing government concern that demand for the white metal could exceed supply without further investment, delaying efforts to combat climate change.
“The government is sending a strong signal that the time has come for us to build this mine,” James Callaway, Ionair’s executive chairman, told Reuters. “We now have the capital to build a very important facility to supply lithium to the United States.”
The loan was under review by the department’s Advanced Technology Vehicle Manufacturing (ATVM) program office for more than two years and is conditional on approval and other factors. The funds will be used to build a lithium carbonate processing facility at the Rhyolite Ridge site near an existing lithium operation run by Albemarle Corp (ALB.N).
In an interview, Jigar Shah, head of the Energy Department’s Loan Programs Office, described the Rhyolite Ridge project as a step forward on US plans to boost lithium production. He said he is “more excited about the rest of the pipeline” of companies applying for ATVM loans. The tenure of the Ionair loan will be 10 years at a fixed interest rate, which will be determined once the funds are disbursed.
A 2020 study estimated the cost of the mine at approximately $785 million. Callaway said Australia-based Einar would need to update that amount in light of recent inflation.
The Department of Energy said the mine would produce enough lithium to make 370,000 EVs each year and reduce annual gasoline consumption by about 145 million gallons.
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 buy lithium from the project.
“Ford and Toyota and everyone else is waiting on us to make it to supply lithium for America,” Callaway said.
The formal phase of the project’s permitting process began last month when the US Fish and Wildlife Service declared Tiehm’s Buckwheat, a rare flower at the project site, an endangered species.
The company has said it is confident it can develop the mine while protecting Phool. The Department of Energy said the loan is contingent on Ioner completing an environmental review process.
“The day I heard about the project, I was informed about the grain situation,” Shah said. “It was part of our due diligence, and we would not have moved forward if we didn’t think (Ionair) had a way to build the facility.”
The department also noted that Ayner changed his mine plan to avoid buckwheat and spent more than $1 million on botanists, greenhouses and related studies.
“The plant’s best chance is with us taking 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 flowers. . The CBD’s Patrick Donnelly said, “The Department of Mines Energy seems to be funding what the mine is not going to be.”
Reporting by Ernest Scheider in Houston and David Shepperson in Washington Editing by Matthew Lewis
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