The US seeks up to a 10% equity stake in Lithium Americas - sources

The US seeks up to a 10% equity stake in Lithium Americas - sources

The U.S. Department of Energy (DOE) is reportedly considering acquiring up to a 10% equity stake in Lithium Americas Corp. (NYSE: LAC), according to sources close to the matter. This development comes amidst ongoing reviews of a $2.3 billion loan for the company's Thacker Pass project in Nevada. The loan, initially approved under the Biden administration, is crucial for constructing a processing plant near one of the country's largest lithium deposits.

Lithium Americas, a lithium resource company, owns 100% of the Thacker Pass project through its wholly owned subsidiary, Lithium Nevada Corp. The project is situated in Humboldt County, northern Nevada, approximately 60 miles northwest of Winnemucca. The company's subsidiaries include RheoMinerals Inc., KV project LLC, and 1339480 B.C. Ltd.

The DOE's review of the loan has raised concerns about the project's feasibility, particularly in light of potential competition from cheaper Chinese lithium. A senior DOE advisor had previously warned that cheap Chinese lithium could make it difficult for Thacker Pass to secure customers. The agency is now reportedly leaning on General Motors (NYSE: GM), which holds a 38% stake in the project, to secure a binding offtake deal to stabilize the project.

This development highlights the strategic importance of the Thacker Pass project to the U.S., which aims to reduce its reliance on Chinese supply chains for electric vehicle (EV) batteries. However, it also underscores the project's vulnerability to market realities and the potential challenges in securing financing.

Lithium Americas investors are bracing for answers as the DOE's review continues. The company's stock slid 1.8% in post-market trading after news of the loan review broke, indicating investor uncertainty about the project's future.