WASHINGTON, Jan 13 (Reuters) – The U.S. Department of Energy said on Friday it will lend Ioneer Ltd. (INR.AX)up to $700 million to build its Rhyolite Ridge lithium mining project in Nevada, a major step forward in President Joe Biden’s plan to develop a domestic electric vehicle supply chain.
Shares of Ioneer rose 16.3% to $16.30 on Friday afternoon in New York.
The loan, which was approved by Energy Secretary Jennifer Granholm, would be Washington’s first for a project mining lithium in the United States, a key ingredient used to make electric vehicle batteries. This reflects the government’s growing 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 build this mine,” James Calaway, chief executive of ioneer, 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 Advanced Technology Vehicle Manufacturing (ATVM) program office and is conditional on permitting and other factors. The funds would 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 Department of Energy’s Office of Borrowing Programs, 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 applying for ATVM loans. The pioneer loan will have a tenor of 10 years at a fixed interest rate defined after the dispersion of funds.
A 2020 study estimated the cost of the mine to be around $785 million. Calaway said the Australia-based ioneer would need to update that figure in light of recent inflation.
The mine would produce enough lithium to build 370,000 electric vehicles a year and reduce annual gasoline consumption by nearly 145 million gallons, the Department of Energy said.
“Ford, Toyota and everyone else is looking to us to build this to supply lithium to the US,” Calaway said.
The formal phase of the project’s permitting process began last month after the US Fish and Wildlife Service declared Tiehm’s buckwheat, a rare flower at the project site, an endangered species.
The company said it believes it can develop the mine while protecting the flower. The Department of Energy said the loan is pending the completion of the environmental review process.
“I learned about the buckwheat situation the first day I heard about the project,” said Shah. “It was part of our due diligence and we wouldn’t have moved forward if we didn’t think that (the pioneer) 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 botanicals, greenhouses and related studies.
“The factory’s best chance is that we take care of it,” Calaway 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 at least 500 meters from any 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
Our standards: The Thomson Reuters Trust Principles.