U.S. to lend ioneer $700 million for Nevada lithium mine (updated)

Ioneer

13/01/2023 18:11

(Recasts first sentence with Biden administration goals, adds
comments by ioneer executive, government official, stock prices,
background)
    By Ernest Scheyder and David Shepardson
       WASHINGTON, Jan 13 (Reuters) - The U.S. Energy
Department said on Friday it will lend ioneer Ltd  INR.AX 
 IONR.O  up to $700 million to build its Rhyolite Ridge lithium
mining project in Nevada, a major step forward in President Joe
Biden's plan to develop a domestic electric vehicle supply
chain.  
    Ioneer shares were up 16.3% at $16.30 on Friday afternoon in
New York. 
    The loan, which was approved by Energy Secretary Jennifer
Granholm, would be the first by Washington to a U.S. mining
project for lithium, a key ingredient used to make electric
vehicle batteries. It reflects rising government concern that
demand for the white metal could outstrip supply without more
investment, delaying efforts to combat climate change.
    "The government is sending a strong signal that it's time to
let us go build this mine," James Calaway, ioneer's executive
chairman, told Reuters. "We now have the capital to build a very
important facility to supply lithium for the United States."
    The loan was in review for more than two years by the
department's Advanced Technology Vehicles Manufacturing (ATVM)
program office and is conditional on permitting and other
factors. The funds would be used to build a lithium carbonate
processing facility at the Rhyolite Ridge site near an existing
lithium operation run by Albemarle Corp  ALB.N . 
    In an interview, Jigar Shah, head of the Energy Department's
Loan Programs Office, called the Rhyolite Ridge project a step
forward on U.S. plans to boost lithium production. He added that
he is "more than excited about the remaining pipeline" of
companies that have applied for ATVM loans. The ioneer loan will
have a term of 10 years at a fixed interest rate set once the
funds are dispersed. 
    A 2020 study had estimated the mine's cost at about $785
million. Calaway said Australia-based ioneer would need to
update that amount in light of recent inflation.
    The mine would produce enough lithium to build 370,000 EVs
each year and reduce annual gasoline consumption by nearly 145
million gallons, the Energy Department said. 
    Ford Motor Co  F.N  and Prime Planet Energy & Solutions, a
joint venture of Toyota Motor Corp  7203.T  and Panasonic Corp
 6752.T , have agreed to buy lithium from the project. 
    "Ford and Toyota and everyone else are waiting for us to get
this built to supply lithium for the U.S.," Calaway said.
    FLOWER
    The formal stage of the project's permitting process began
last month after the U.S. Fish and Wildlife Service declared
Tiehm's buckwheat, a rare flower at the project site, an
endangered species. 
    The company has said it believes it can develop the mine
while protecting the flower. The Energy Department said the loan
is contingent on ioneer completing the environmental review
process.
    "I was made aware of the buckwheat situation the first day I
heard about the project," Shah said. "It was part of our
diligence, and we wouldn't have moved forward if we didn't think
(ioneer) had a path to building the facility."    
    The department also noted that ioneer changed its mine plan
to avoid the buckwheat and has spent more than $1 million on
botanists, greenhouses and related studies.
    "The plant's best chance is with us taking care of it,"
Calaway said. 
    The Center for Biological Diversity (CBD), an environmental
group opposed to the project, said it believes the company will
need to move its mine back at least 500 meters from any of the
flowers. "The mine the Department of Energy thinks it's funding
is not the mine that's going to get built," said the CBD's
Patrick Donnelly.   
 (Reporting by Ernest Scheyder in Houston and David Shepardson
in Washington
Editing by Matthew Lewis)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))