When the Trump administration took a 10% stake in Intel (INTC) in August, it was met with significant criticism from people in Trump’s own party who saw the move as trampling on the edicts of a free-market economy that Republicans have long held dear.
But the White House was apparently unfazed by the backlash because on Wednesday the U.S. Department of Energy (DOE) said that the federal government was taking a 5% equity ownership in Lithium Americas Corp. (LAC) in order to “solidify the launch of the only domestic source of lithium carbonate here in America.”
The deal is being made with the support of General Motors (GM), which is a joint partner with Lithium Americas in its Thacker Pass lithium project in Nevada.
The US government is also taking a 5% stake in the Thacker Pass joint venture.
Lithium Americas also said that it has reached an agreement with the Energy Department to draw $435 million from a previously announced $2.26 billion loan from the DOE. The department also agreed to defer $182 million of debt service over the first five years.
The loan was finalized by the Biden administration last year, but Lithium Americas and GM had asked the DOE to restructure the deal because they were struggling to meet its initial conditions, as Bloomberg reported.
U.S. Energy Secretary Chris Wright noted in a statement that the United States currently produces less than 1% of the global lithium supply despite “having some of the largest deposits.”
“Today’s announcement helps reduce our dependence on foreign adversaries for critical minerals by strengthening domestic supply chains and ensures better stewardship of American taxpayer dollars,” Wright said.
Shares of Lithium Americas rose 23.3% on news of the deal.
Trump looks to rewire supply chains
The DOE noted in its statement that once fully operational, Thacker Pass is expected to produce approximately 40,000 metric tons per year of battery-grade lithium carbonate for use in lithium-ion batteries.
“We greatly appreciate the support of the Administration, General Motors and our partners in advancing this vital world-class project,” Jonathan Evans, president and CEO of Lithium Americas, said in a statement. “Together, we are onshoring large-scale U.S. lithium production, strengthening America’s supply chain, creating exceptional jobs and enhancing our long-term energy security and prosperity.”
It appears likely that the Trump administration will seek to take ownership stakes in other American companies that it deems crucial to bolstering the supply chains of critical minerals – and to lessen America’s reliance on China and other foreign countries.
The Department of Defense – which has now been renamed the U.S. Department of War (DoW), entering into a 10-year public-private partnership with Nevada-based rare earth company MP Materials (MP) in July.
As part of the agreement, the DoW has agreed to purchase $400 million of a newly-created series of the MP Material’s preferred stock, which is convertible into shares of the company’s common stock. There is also an option for the department to purchase additional shares.
The investment makes the DoW the largest shareholder of MP Materials.
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