By Ernest Scheyder
(Reuters) – The U.S. Department of Energy has finalized a $996 million loan for ioneer’s Rhyolite Ridge lithium project, according to documents reviewed by Reuters, an increase of $296 million from a preliminary funding offer and a move aimed at boosting President Joe Biden’s green energy legacy.
Shares of ioneer jumped 15% to $4.96 during Friday afternoon trading in New York.
Scant U.S. production of lithium, an ultralight metal used to make batteries for electric vehicles and many consumer electronics, has left the country reliant on supplies from market leader China, an imbalance Biden has tried to offset during his four years in office.
The loan, details of which have not been reported, is nearly 50% larger than a conditional funding commitment made two years ago and cannot be reversed by incoming President Donald Trump.
Funds will be used to build a lithium processing facility in rural Nevada that will supply Ford and other EV manufacturers by 2028.
The increased funding was due to post-pandemic inflation and new geological studies showing the Rhyolite Ridge deposit, located roughly 225 miles (362 km) north of Las Vegas, contains more lithium than estimated two years ago, a senior Energy Department official told Reuters.
“That gave everyone more comfort that this was a far better resource than originally imagined,” said the official. The Energy Department also doubled the loan’s repayment timeline to 20 years.
In 2020, Australia-based ioneer estimated the mine’s cost at roughly $785 million. Company officials have acknowledged that figure is now much higher but they declined to provide an updated estimate.
James Calaway, ioneer’s chairman, called the loan closing an important milestone for increasing U.S. lithium output.
Calaway said the company would now work to close a $490 million equity investment that South Africa-based Sibanye Stillwater agreed to in 2021. A Sibanye spokesperson said the company was in final due diligence related to ioneer’s project.
The government loan for ioneer comes less than three days before Biden leaves office, one of the last actions taken by Biden-appointed Energy Department staff who return government-issued laptops and cell phones on Friday.
Last August, Reuters reported that U.S. mining projects were rushing to close government loans out of concern that Trump could block funding if reelected.
LOAN DETAILS
The Rhyolite Ridge project aims to produce 22,000 metric tons of lithium annually, enough to produce 370,000 EVs, as well as boron, a chemical used to make soaps. That would give the project two sources of revenue, a key appeal to Energy Department loan officials. The U.S. produces less than 5,000 metric tons of lithium annually.
The ioneer loan had been in review since 2021 and approval required the project to receive its federal permit, which Biden granted last October. Still, more paperwork and negotiation was needed before the loan could close.
The company will be able to access the funds in tranches once it raises additional equity, per Energy Department guidelines. Calaway said ioneer is talking with other potential financiers.
Construction is slated to begin this year. The loan includes $968 million of principal and $28 million of capitalized interest.
Biden officials in the past month have also finalized a $2.26 billion loan for Lithium Americas and announced a $1.36 billion conditional funding commitment for a direct lithium extraction project in California.
The Biden administration is “fully confident” the three projects should be able to meet U.S. lithium needs by the early 2030s, said the Energy Department official.
(Reporting by Ernest Scheyder; Editing by Veronica Brown, Toby Chopra and David Gregorio)
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