The Thacker Pass lithium mine is constructed near Orovada, Nev. Last year, the Biden administration agreed to provide a $2.26-billion conditional loan to Lithium Americas to help cover its construction costs.Rick Bowmer/The Associated Press
The Donald Trump administration has wrestled an equity stake in Lithium Americas Corp. LAC-T, and an ownership stake in its U.S. lithium mine, as part of a renegotiation of a financing package previously agreed upon with the Joe Biden administration.
Vancouver-based Lithium Americas is building a massive new lithium mine in Nevada that over time should help wean the U.S. off of China for one of the key minerals used in low carbon energy.
Lithium Americas in late 2024 announced it had secured US$2.26-billion in loans from the Biden administration to build its Thacker Pass mine in Nevada. But in recent months, as the company was attempting to draw on that loan, the Trump administration took a second look and ultimately obtained both a 5-per-cent equity position in the company and a 5-per-cent stake in the mine itself.
The U.S. will be issued warrants that allow it to buy the equity stake in Lithium Americas for $0.01 a share, a level that makes them essentially free.
For the stake in Thacker Pass, Lithium Americas will issue warrants to the U.S. government at $0.01 per unit.
“It’s hard to spin this transaction as anything other than what it is: dilutive,” Scotia Capital analyst Ben Isaacson said in a note to clients on Wednesday. “That said, we understand there was really no choice for LAC management, and they brought shareholders the best possible deal from the U.S. government.”
Despite the dilution, shareholders are cheering on the deal as a sign the company’s future is more secure, given the substantially bigger interest the Trump administration has in the success of the company.
Shares in Lithium Americas rose by 20 per cent in early trading on the Nasdaq on Wednesday.
Lithium Americas in a release said that as part of the new deal with the Trump administration, it obtained a deferral on US$182-million of debt service over the first five years of the government loan. That will give the company added cash flow flexibility in the early years of the mine’s operation.
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The first phase of Lithium America’s Thacker Pass project is projected to produce up to 40,000 tonnes a year of lithium carbonate, a level that would bump up U.S. output close to China’s and Chile’s, two of the biggest producers.
The Trump administration in recent months has essentially become an activist investor in its negotiations with private enterprise. No longer content with advancing loans, the U.S. government is demanding equity stakes in companies in its negotiations. The Trump administration has recently taken stakes in chip maker Intel Corp. INTC-Q and rare earth company MP Materials Corp. MP-N, as part of that strategy.
U.S. Energy Secretary Chris Wright in a release said that the government’s stake in Lithium Americas “helps reduce our dependence on foreign adversaries for critical minerals by strengthening domestic supply chains and ensures better stewardship of American taxpayer dollars.”