Jonathan Evans, head of Canada’s largest lithium company, is hopeful that US efforts to boost domestic production of critical minerals will help fill the gap in lithium investment from the private sector, as he seeks a partner to build a major new mine in Nevada.
US President Joe Biden invoked the Defense Production Act this week, further turning the tap on already extensive US government funding for critical minerals industries, including lithium.
“It’s a pretty big statement,” said Mr. Evans, CEO of Lithium Americas Corp. THE ACT “And I’m not quite sure what else the government can do.”
Both the United States and Canada have been trying to cut off Chinese supplies of critical minerals and boost their own nascent industries. China is among the biggest miners of lithium, a key component in electric vehicle batteries, and has a 60 percent share of refining. There are currently no lithium mines in Canada, and only one in the United States, the Silver Peak mine in Nevada, operated by Albemarle.
Originally conceived during the Cold War, the Defense Production Act will see the US government potentially pour money into feasibility studies for early-stage projects, and possibly fund technological innovation to boost production and encourage better remedies. for tailings in existing mines.
The law was last invoked at the start of the COVID-19 pandemic to encourage US factories to boost production of personal protective equipment and respirators.
Even before Mr. Biden’s move, the US government has been offering billions in incentives to the critical minerals industry, including grants available through the Department of Energy and loans from the US Treasury. .with extremely low interest for the construction of mines.
With a market value of $6.4 billion, Vancouver-based Lithium Americas is by far Canada’s largest lithium player. It owns the Thacker Pass lithium project in Nevada, which is projected to be the largest lithium mine in the United States once it goes into production, with a projected production of 60,000 tons of lithium carbonate per year, over a lifetime. 46-year-old mine life.
Despite all the incentives the government is offering, investors have still been reluctant to fund the US lithium industry, Evans said.
Extremely long lead times that can stretch a decade or more between a mineral’s discovery and first production mean investors have been spooked. The regulatory framework in North America has also become increasingly cumbersome, with heightened scrutiny of the environmental impact of new mines and lengthy consultations with stakeholders.
Court challenges over new mines have also become commonplace. Lithium Americas won a record decision to proceed with construction of Thacker Pass last year, but is still awaiting a ruling on appeal of that decision.
An additional hurdle for Lithium Americas in finding a Thacker Pass partner is the technical nature of the deposit. The lithium is not contained in hard rock or brine, the industry standards, but in clay. Currently, there are no other major clay lithium mines in production, Evans said.
Furthermore, the list of potential global partners is limited because China, the largest investor of all in the lithium space, is not an option. Mr. Evans says there is no way the United States would allow a Chinese company to own a lithium project on domestic soil.
Whether Lithium Americas finally finds a partner or goes it alone at Thacker Pass, it will hope not to emulate Canada’s Nemaska Lithium experience.
A few years ago, Quebec-based Nemaska touted its novel technology for converting lithium as a game changer. After raising more than $1 billion from investors, the company embarked on its ambitious project only to see its capital costs skyrocket. Nemaska was eventually forced to seek creditor protection, wiping out its shareholders.
A recently capitalized iteration of Nemaska, owned by London-based private equity firm Pallinghurst Group, is attempting to revive the project and hopes to have a new mine in production within a couple of years.
The industry will expect the path to Lithium America production to be much easier than Nemaska’s.
“We cannot see how the US achieves its EV goals without Thacker Pass,” Puneet Singh, an analyst at Industrial Alliance Securities Inc., said in a recent note to clients.
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