The US Department of Energy announced Wednesday that they would move ahead on their proposal to take a 5% stake in both Lithium Americas and the company’s joint mining venture with GM, representing the next step in the Trump administration’s move to onshore production of the critical mineral.
The deal was struck as part of renegotiations over a $2.26B loan from the DOE to Lithium Americas for their Thacker Pass, Nevada mine development project with GM.
Lithium Americas stocks rose 24% by close on Wednesday, while its competitor Albemarle Corporation rose 4.18%.
For the American lithium industry, the move signals that the federal government is willing to make good on its promise to develop lithium mining operations at home, in an effort to curb dependence on China, which refines the vast majority of lithium on the global market.
“The administration wants to support as much domestic production of any good,” said Seth Goldstein, senior equity analyst for Morningstar. “To the extent Albemarle wants to invest in new mines, either Kings Mountain, North Carolina or the lithium extraction that can be added to their bromine operation in Arkansas, you know, the Trump administration might be interested in supporting them there.”
While Goldstein cautioned that there are no clear benefits to Albemarle from this specific deal, he added, “At the very least, if Albemarle had an agreement with the US Government in the future, it would likely be favorable for Albemarle.”
Albemarle Corporation is currently operating the only active lithium mine in the United States, located in Silver Peak, Nevada, but in a volatile market the company has continually struggled to further develop its proposed onshore mining and refinery operations. The company started and then paused a new refinery project earlier this year, in Chester County, South Carolina, citing a lack of government support.
Amidst a downturn in the volatile cycle of lithium prices, Albemarle restructured their C-Suite earlier this year in order to help cut costs.
Simultaneously, US EV tax subsidies expired on Wednesday, which the critical minerals analytics firm Benchmark predicts will draw down EV sales 42% over the next five years, likely causing demand for lithium to grow at a slower pace.