WASHINGTON, Jan 13 (Reuters) – The U.S. Energy Department said on Friday it will lend ioneer Ltd ( INR.AX ) up to $700 million to build the 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.
Ioneer shares rose 16.3% to $16.30 on Friday afternoon in New York.
The loan, which was approved by Energy Secretary Jennifer Granholm, would be the first by Washington to a US mining project for lithium, a key ingredient used to make batteries for electric vehicles. It reflects growing government concerns that demand for the white metal could outstrip supply without more 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 Calaway, ioneer’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 reviewed for more than two years by the department’s Advanced Technology Vehicles Manufacturing (ATVM) program office and is subject to permitting and other factors. The funds will be used to build a lithium carbonate processing plant 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 program office, called the Rhyolite Ridge project a step forward in U.S. 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 will have a term of 10 years at a fixed interest rate set when the funds are dispersed.
A 2020 study had estimated the mine’s cost at around $785 million. Calaway said Australia-based ioners would need to update that amount in light of recent inflation.
The mine will produce enough lithium to build 370,000 electric cars each year and reduce annual gasoline consumption by nearly 145 million gallons, the Energy Department said.
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 for us to get this built to supply lithium to the United States,” 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 has said it believes it can develop the mine while protecting the flower. The Energy Department 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. “That was part of our due diligence, and we wouldn’t have moved forward if we didn’t think (Ioneer) had a path to build the facility.”
The department also noted that Ioneer changed the mine plan to avoid the buckwheat and has spent more than $1 million on botanists, greenhouses and related studies.
“The facility’s best chance is for us to 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 have to move the mine back at least 500 meters from some of the flowers. “The mine the Department of Energy thinks it’s funding is not the mine that’s going to be built,” CBD’s Patrick Donnelly said.
Reporting by Ernest Scheyder in Houston and David Shepardson in Washington Editing by Matthew Lewis
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