Lithium Americas has broken ground on its Thacker Pass mining operations, potentially opening the door to what some are calling the largest lithium deposit in the entire world. However, it’s estimated to be another three years before refinement takes place and the materials can be adapted for use in battery powered products — including all-electric vehicles.
According to Automotive News, Lithium America is claiming it’s the “only fully permitted new lithium mining project” inside the United States “with a clear path to production.” This is the result of 20 years of exploratory drilling, materials analysis, and planning roads and facilities that will help make the mining processes feasible.
From Automotive News:
But the Thacker Pass project remains complex. It has received a conditional $2.3 billion federal development loan commitment and will have to raise money to finalize and ultimately access the loan.
At other sites, lithium is contained in hard rock or dissolved in brine deposits, which are pools of salty groundwater. The lithium deposits at this site are embedded in clay, requiring a new combination of technologies to extract at scale.
And the project is not without controversy. Some Native American tribes say the mine infringes on the site of an 1865 massacre. The Reno-Sparks Indian Colony and the Summit Lake Paiute Tribe filed lawsuits — which were ultimately dismissed — saying they were not consulted as required and that the Thacker Pass project desecrates a site of spiritual and historical significance.
The company has worked to appease concerns with concessions, including a community benefits agreement.
Lithium Americas’ path is a stark reminder that battery materials mining in the U.S. is not easy and that producing the components for tailpipe emissions-free EVs still has social and environmental costs.
Even without the Biden administration’s corporate incentives to pivot the automotive industry toward electric vehicles, lithium mining is viewed as a broadly lucrative endeavor. Unless battery chemistry changes dramatically within the next decade, lithium should remain an extremely valuable commodity — and one that has been overwhelmingly dominated by Australia, China, and a handful of South American countries.
Thacker Pass was among several projects subjected to an expedited environmental review process during the pandemic. The assumption was that the United States would need lithium if it were to become a globally relevant battery producer and that it was already behind its primary economic rival. The fact that the Biden administration has been incentivizing anything pertaining to EV production was another item that presumably came into play, as was the fact that regulatory assessments probably would have been slow during COVID-19. The fact that lithium mines have taken criticism for polluting groundwater may have also been a contributing issue. Pushing the program through as quickly as possible may have avoided some scrutiny that would have ultimately crippled progress.
Automotive News noted that several environmental groups filed lawsuits alleging the streamlined process did not consider environmental impacts. Tribal groups did the same, with some arguing that the mines represented a human rights violation. However, those entities ultimately lost their legal battles and only managed to stall the project.
Tim Crowley, vice president of government affairs and community relations at Lithium Americas, said the “thoroughness of the process was upheld through judicial review by the Federal District and Circuit Courts.”
But the resulting litigation has still been costing the company millions of dollars. Some investors are worried about cash burn. Lithium Americas went through $193.7MM just on Thacker Pass last year and is in a position where it’ll presumably need to raise money to continue on. This isn’t terribly surprising, considering the company knows it’s still years away from producing anything of value. But it will still need to exist in the interim period to reach a point where mining can begin in earnest.
At the time of this writing, Lithium Americas possesses a market capitalization of $760 million (USD). That comes after a noteworthy decline in the last couple of days when it was previously valued closer to $980 million. It also spent $228 million last year, which was nearly one quarter of the company’s market value before its valuation fell. Fortunately, things seem to have stabilized since then and investors seem to be waiting to see what happens next after what looks to have been an intentional short.
Moving forward, the Department of Energy plans on offering the business a loan that should cover a majority of its first phase of construction. But the conditions require Lithium Americas to exhaust all other forms of debt and equity for the remaining costs. General Motors is also tied up with the company via a $650 million equity investment. However, the assumption is that the mining firm will still need to source a couple hundred million dollars via a 2024 funding round.
Regardless, the business has meaningful support and is allegedly onto something that could fundamentally change the American manufacturing base and bring a significant number of jobs to the community. But its likewise loaded up with environmental, sustainability governance and safety (ESG-S) goals that feel empty considering the level of push back it has seen from some native and environmental groups. ESG is frequently prevalent among companies trying to game the system since scoring is often determined by major financial institutions and investment firms hoping to drive policy. But it’s often meaningless when put into practice and we’ve seen some of the world’s biggest polluters with the worst human-rights track records still receiving desirable ESG ratings, not that the trend necessarily applies to Lithium Americas.
At a minimum, it seems wise to watch the company closely and take any overwhelmingly positive or negative reports with a touch of skepticism. Even under the most ideal scenario, it’s going to be a few years before Thacker Pass is up and running and it’s going to take sustained funding to get there.
[Image: Lithium Americas]
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