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Loan increased due to inflation and bigger lithium deposit

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Rhyolite Ridge to produce 22,000 metric tons of lithium

annually

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Biden administration confident U.S. lithium needs can be

met by

by 2030s

By Ernest Scheyder

Jan 17 (Reuters) - The U.S. Department of Energy has

finalized a $996 million loan for ioneer's

Rhyolite Ridge lithium project, according to documents reviewed

by Reuters, an increase of $296 million from a preliminary

funding offer and a move aimed at boosting President Joe Biden's

green energy legacy.

Scant U.S. production of lithium, an ultralight metal used

to make batteries for electric vehicles and many consumer

electronics, has left the country reliant on supplies from

market leader China, an imbalance that the outgoing Biden has

tried the past four years to offset.

The loan, details of which have not been reported, is nearly

50% larger than a conditional funding commitment made two years

ago and cannot be reversed by incoming President Donald Trump.

Funds will be used to build a lithium processing facility in

rural Nevada that will supply Ford and other EV

manufacturers by 2028.

The increased funding was due to post-pandemic inflation and

new geological studies showing the Rhyolite Ridge deposit,

located roughly 225 miles (362 km) north of Las Vegas, contains

more lithium than estimated two years ago, a senior Energy

Department official told Reuters.

"That gave everyone more comfort that this was a far better

resource than originally imagined," said the official. The

Energy Department also doubled the loan's repayment timeline to

20 years.

Australia-based ioneer had estimated the mine's cost at

roughly $785 million in 2020. While company officials have

acknowledged that figure is now much higher, they declined to

provide an updated estimate.

James Calaway, ioneer's chairman, said the loan closing

represented an important milestone for increasing U.S. lithium

output.

Calaway said the company would now work to close a $490

million equity investment that South Africa-based Sibanye

Stillwater agreed to in 2021. A Sibanye spokesperson

said the company is in final due diligence related to ioneer's

project.

The government loan for ioneer comes less than three days

before Biden leaves office and is one of the last actions taken

by Biden-appointed Energy Department staff, who are returning

government-issued laptops and cell phones on Friday.

Last August, Reuters reported that U.S. mining projects were

rushing to close government loans out of concern that Trump

could block funding if reelected.

LOAN DETAILS

The Rhyolite Ridge project aims to produce 22,000 metric

tons of lithium annually, enough to produce 370,000 EVs, as well

as boron, a chemical used to make soaps. That would give the

project two sources of revenue, a key appeal to Energy

Department loan officials. The U.S. produces less than 5,000

metric tons of lithium annually.

The ioneer loan had been in review since 2021 and approval

required the project to receive its federal permit, which Biden

granted last October. Even still, the permit did not immediately

lead to the loan's closure and required more paperwork and

negotiation.

The company will be able to access the funds in tranches

once it raises additional equity, per Energy Department

guidelines. Calaway said that ioneer is talking with other

potential financiers.

Construction is slated to begin later this year. The loan

includes $968 million of principal and $28 million of

capitalized interest.

Biden officials in the past month have also finalized a

$2.26 billion loan for Lithium Americas ( LAC ) and announced a

$1.36 billion conditional funding commitment for a direct

lithium extraction project in California.

The Biden administration is "fully confident" that the three

projects should be able to meet U.S. lithium needs by the early

2030s, said the Energy Department official.