WASHINGTON, Jan 13 (Reuters) – The U.S. Energy Department said on Friday it would lend up to $700 million to ioneer Ltd ( INR.AX ) to build its Rhyolite Ridge lithium mining project in Nevada, a major step in President Joe Biden’s plan. Developing a domestic electric vehicle supply chain.
Ioneer shares were up 16.3% at $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 growing government concern that demand for the white metal could outstrip supply without further investment, delaying efforts to tackle climate change.
“The government is sending a strong signal that it’s time to let us go build this mine,” ioneer Executive Chairman James Callaway told Reuters. “We now have the capital to build a very important facility to supply lithium for the United States.”
The loan was reviewed by the department’s Advanced Technology Vehicle Manufacturing (ATVM) program office over two years and is conditional on permits 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 operated by Albemarle Corp ( ALB.N ).
In an interview, Jigar Shah, head of the Energy Department’s Office of Loan Programs, called the Rhyolite Ridge project a step forward on US plans to increase lithium production. He added that he is “more excited about the remaining pipeline” of companies applying for ATVM loans. The tenure of the ionaire loan will be fixed for 10 years at a fixed interest rate once the funds are disbursed.
A 2020 study estimated the cost of the mine at about $785 million. Callaway said Australia-based Ionair 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 EVs per year and reduce annual gasoline consumption by about 145 million gallons.
Ford Motor Co ( FN ) and Prime Planet Energy & Solutions, a joint venture of Toyota Motor Corp ( 7203.T ) and Panasonic Corp ( 6752.T ), have agreed to buy lithium from the project.
“Ford and Toyota and everybody else is waiting to get this built to supply lithium for the US,” Callaway said.
The formal phase of the project’s permitting process began last month after the US Fish and Wildlife Service declared Tihem’s buckwheat, a rare flower at the project site, an endangered species.
The company has said it believes it can develop the mine while protecting the flower. The Energy Department said the loan is contingent on Ionair completing an environmental review process.
“I was made aware of the buckwheat situation the same day I heard about the project,” said Shah. “That was part of our due diligence, and we wouldn’t have moved forward if we didn’t think (Ionair) had a way to build the facility.”
The department also noted that ioneer changed its mine plan to avoid buckwheat and spent more than $1 million on botanists, greenhouses and related studies.
“The plant’s best chance is to take care of it with us,” 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. “A mine that the Department of Energy believes will be built by funding is not a mine,” said CBD’s Patrick Donnelly.
Reporting by Ernest Scheder in Houston and David Shepherdson in Washington Editing by Matthew Lewis
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