By Kennedy Maize
Is the Trump administration making a mistake eyeing a major equity position in a large Nevada lithium mine? Is it pondering investing in a mineral that will soon see its current advantages overcome by market and technology developments?
U.S. news media have been widely reporting that the White House is looking at a major direct investment in what could be the nation’s largest lithium mine, the Thacker Pass mine, now under development near the Oregon border. The AP reported, “The proposed equity stake in Vancouver-based Lithium Americas is the latest example of President Donald Trump’s administration intervening directly in private companies.”
Some have dubbed the administration’s recent largely unprecedented practice of taking ownership shares of private companies and, also, telling private companies how to behave in the marketplace, as following the “Chinese communist model.”
The administration has bought control of the nation’s only rare earth mine, acquired a 10% interest in computer chip maker Intel, inserted itself into board room decisions in return for approving the merger of Japan’s Nippon Steel and U.S. Steel, and told private utilities to keep money-losing powerplants running (with the costs paid by their customers). It has justified its actions on “national security,” and “emergency” conditions.
Canada’s Lithium Americas — traded on the Toronto Stock Exchange (TSX:LAC) and New York Stock Exchange (NYSE:LAC) – partnered with General Motors in 2023 to develop the Nevada mine for lithium ion batteries primarily aimed at the electric vehicle market and electricity storage. GM has become a major EV player in the U.S., mounting a challenge to once-dominant Tesla. GM invested $625 million for a 38% stake in Lithium Americas.
Lithium ion batteries have also been the heart of the electric storage business that has emerged to partner with solar and wind power production to produce dispatchable electricity. It’s a booming market that is transforming the way electricity is made available.
According to Reuters, which first reported the story citing two unidentified sources, the administration is proposing to take a 10% piece of the company, through renegotiation of a Biden administration’s Department of Energy $2.26 billion loan to Lithium Americas. The first Trump administration’s Interior Department approved the use of public land for the $2.93 billion project in its final days in 2021.
The Biden DOE’s Loan Program Office approved the loan in October last year. According to Reuters, “The loan has a 24-year term, with interest rates based on the U.S. Treasury rate as each tranche is drawn.”
A major part of the rationale for the White House intrusion into the operation of the company is the predictable threat of Chinese domination of the lithium market. China is the leading worldwide producer at over 40,000 tons annually. Thacker Pass, expected to be in production in 2028, is designed to also produce 40,000 tons a year.
Last week (Sept. 24), Germany’s Neptune Energy made an announcement that could change the complexion of the international lithium market. The company said it has confirmed that a lithium carbonate deposit it has been exploring in Saxony-Anhalt state is “one of the world’s largest lithium resources.” Neptune said the Anhalt region has long been a natural gas producer. It and its predecessor companies “have been producing natural gas here since 1969.”
Neptune said it had independent confirmation of a lithium resource amounting to some “43 million tons of lithium carbonate equivalent.” Axel Wenke, director of New Energy at Neptune, said, “The Altmark region combines geological potential, established infrastructure, and technical know-how – perfect conditions to successfully complete the transformation from natural gas production to environmentally friendly lithium extraction.”
Vastly increased lithium production from Thacker Pass and from Germany, combined with Chinese production, could put lithium carbonate prices and producer shares into a nosedive. According to the Trading Economics website, lithium carbonate prices have been volatile recently. Prices “rebounded to 73,900 yen per tonne from the one-month low of 72,450 on September 15th, as markets continued to assess the uncertain outlook of Chinese supply this year. Reports indicated that mining activity in [China’s] Jiangxi mine was due to re-open after halting operations in August, although the exact normalization schedule was unconfirmed.”
The Chinese yen is valued at 1=$0.14. Prices hit a low of 60,000 yen in late June and a high of a bit over 85,000 yen in late August.
New technology developments could lead to fundamental doubts about the future of lithium ion batteries. U.S. news website Electrek reported Sept. 25, “Peak Energy just switched on a 3.5 MWh sodium-ion battery, the largest sodium-ion energy storage project developed in the US. The system is the first of its kind at grid scale, and may eventually be a game-changer for delivering affordable energy in the US.”
Sodium-ion batteries could be a major game-changer for energy storage. Electrek noted, “Sodium-ion batteries work well in hot or cold weather without auxiliary cooling systems. That makes them cheaper and easier to maintain, especially for utility-scale projects. They also use more abundant materials. The US holds the world’s largest soda ash reserves, a key sodium-ion ingredient, and the whole raw material supply chain can be sourced domestically or from allied countries.”
Peak Energy, based in California and Colorado, describes itself as “Americas first vertically integrated energy storage company.” The company brags, “We’ve solved the final constraints of Cost, Safety, and Reliability—making it possible for Battery Storage to scale with the grid and support the explosive growth of AI, manufacturing, and electrification. Our Sodium-Ion technology is specifically engineered for stationary storage: it’s safer, lower-cost, and free from the critical mineral dependencies that have long bottlenecked lithium-based solutions.”
We’ll see.
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