Biden boosts loan for ioneer's Nevada lithium mine to nearly $1 billion (updated)

Ioneer

17/01/2025 20:32

* 
      Loan increased due to inflation and bigger lithium deposit
    

        * 
      Rhyolite Ridge to produce 22,000 metric tons of lithium
annually
    

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      Biden administration confident US lithium needs can be met
by by
2030s
    

        * 
      Shares of ioneer gain more than 15% 
    

  
 (Adds stock movement in second paragraph)
    By Ernest Scheyder
       Jan 17 (Reuters) - The U.S. Department of Energy has
finalized a $996 million loan for ioneer's  INR.AX  IONR.O 
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  F.N  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  SSWJ.J  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  LAC.TO  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)
 ((ernest.scheyder@thomsonreuters.com; X: @ErnestScheyder;
+1-469-691-7667; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))