Lithium Americas’ stock surges amid possible US government stake

President Donald Trump’s administration is considering purchasing a 10% stake in Canadian-based lithium mining company Lithium Americas.

According to two people with knowledge of the situation, the White House may consider purchasing a stake in the business, according to a Reuters report on Tuesday.

The US Department of Energy’s $2.2 billion loan for the largest planned project of its kind in the Western Hemisphere, Thacker Pass mining project, is a possible investment as part of the company’s $2.5 billion loan.

The Vancouver-based business confirmed on Wednesday that it has been discussing the Thacker Pass loan with General Motors and the Department of Energy.

Government stakes

The decision highlights Trump’s growing reliance on China, which is the country’s main supplier of minerals, and to steer strategic industries.

China is the third-largest producer of lithium in the world, behind Australia and Chile, but it dominates the industry’s refining, processing more than 75% of the lithium into battery-grade material annually.

As part of Washington’s long-standing effort to increase the production of lithium, a metal used to make batteries for electric vehicles and other electronics, the project is seen as a linchpin in developing a domestic supply chain.

Recently, the Trump administration made the decision to acquire Intel, a chipmaker. Following a deal that would give the Department of Defense its majority stake in MP Materials, a rare earths company,

According to Jefferies, the administration’s preference for equity stakes can support financing, corporate profits, and favorable returns on invested capital due to the latter’s political cost being lower than tax increases.

Both Lithium Americas’ Canadian and US-listed shares increased by about 90 percent, reaching a price of $ 8.04 ($5.78) in Canada and $ 5.80 US. As of the most recent close on the New York Stock Exchange, the business was valued at $744.5 million.

GM, which previously invested $ 625 million in the mine for a 38 percent stake, has the right to purchase all of the project’s lithium from its initial phase and a portion of the second phase for 20 years, despite Trump’s officials’ current request for a guarantee that GM will buy the metal, according to the sources.

The MP Materials-Defense Department model demonstrates how government equity, long-term offtake, and price support can reduce strategic projects, according to Mohamed Sidibe, an analyst for NBCFM Research.

Even though it may dillute existing shareholders, he added, a similar strategy for Lithium Americas might improve funding and project viability.

Production is anticipated to start in 2028 for the Thacker Pass project.