Critical Mineral Loans in U.S. Mining

By Ernest Scheyder
(Reuters) – U.S. miners and battery recyclers are rushing to close government loans worth billions of dollars before January out of concern that former President Donald Trump would, if reelected, block funding needed to boost American output of critical minerals for the energy transition.

Tumbling prices this year for lithium, nickel and other minerals, as well as lower-than-expected EV sales, have spooked private financiers and put the traditionally conservative mining industry in the unusual position of needing Washington’s support to grow and counter what the West sees as China’s market manipulations.

Under President Joe Biden, the U.S. Department of Energy’s Loan Programs Office (LPO) has awarded nearly $25 billion in conditional loans to 21 companies, including Li-Cycle, ioneer, Lithium Americas (NYSE:LAC), Redwood (NYSE:RWT) Materials and others planning to build facilities that recycle batteries or process lithium and other minerals for use in electric vehicles. Such conditional loans still need final approval, which takes time.

Solar companies, including South Korea’s Qcells, and hydrogen firms, including Plug Power (NASDAQ:PLUG), have also received conditional loans, yet their plans rely in part on domestic supply of critical minerals, thus making the funding for mines crucial for the U.S. energy transition.

The average LPO loan is for $1 billion and each must be reviewed by the office and others across government – including engineers, financial experts and even Energy Secretary Jennifer Granholm – before funds are dispersed.

Given Trump’s pledge to “end the electric vehicle mandate” and plans laid out by former Trump administration officials in the Project 2025 document to shutter the LPO, mining companies and others are rushing to close the loans before Biden leaves office in five months. Some are likely to fall short, given the short timeframe, according to interviews with more than two dozen industry executives, consultants, investors, analysts and policymakers.

Without those financial lifelines, many domestic critical minerals projects could be frozen in the planning stage, crippling the Western EV supply chain as Beijing-linked rivals boost market share by flooding global markets with cheap supplies of metals.

One executive with a loan pending before the LPO said Trump was “a wild card,” so the company was keen to get its loan finalized before a new president takes office in January. The executive was one of five interviewed for this article who, along with other experts in the field, declined to be identified so as not to offend Trump or Vice President Kamala Harris.

Trump tried to distance himself from Project 2025, although much of its energy-related portions were written by aides from his first term.

LPO staff members mentioned that they would be unable to finalize many outstanding loans before January, with most likely falling to the next president to address, according to three sources with knowledge of the conversations.

The Harris and Trump campaigns did not respond to requests for comment.

The U.S. Department of Energy stated that the loan program has “provided a bridge to bankability for American entrepreneurs and innovators for almost 20 years” and holds “responsible stewardship of taxpayer money” as a key priority.

“Federal programs like ours regularly continue across administration changes,” said an Energy Department spokesperson.

Harris is expected to continue many of the climate policies implemented by Biden, although her aides told Reuters she is being strategically ambiguous with energy proposals.

The LPO employs around 400 people, up from 90 when Biden and Harris took office in January 2021.

Trump issued only one LPO loan during his first term, by lending to a Georgia nuclear project that previously received loans under Barack Obama. The LPO was sidelined during the rest of Trump’s term but updated lending policies before leaving office to invite critical minerals projects.

Much uncertainty in a potential Trump second term centers on how he would implement funding parts of the IRA, which boosted LPO funding but was opposed by Trump. While he couldn’t unilaterally close the LPO, he could slow the loan underwriting process.

Plug Power, which is developing multiple U.S. hydrogen plants, said it’s closely working with the Energy Department to finalize its $1.66 billion loan. CEO Andy Marsh expressed confidence that future administrations will support projects with prior conditional approvals.

Mining Projects

The LPO, which gave Tesla a $465 million loan in 2010, has been meticulous in its loan review process under Biden. More than two-thirds of applicants require help navigating the complex credit review timeline, per LPO chief Jigar Shah.

For U.S. mining projects, any funding delay could jeopardize plans to supply cathode and battery facilities, many awaiting LPO funding.

In Nevada, ioneer is pushing to close a $700 million LPO loan for its Rhyolite Ridge lithium project, estimated to surpass $1 billion in cost. General Motors-backed Lithium Americas is also starting work on its nearly $3 billion Thacker Pass lithium project, expecting to close a $2.26 billion LPO loan by December.

“We’re pleased that our project was supported by the Trump and Biden administrations,” said a spokesperson for Lithium Americas.

Recycling startups Li-Cycle and Redwood are rushing to close LPO loans as well, with Redwood waiting for its $2 billion loan.

Li-Cycle is working closely with the Energy Department on securing financing documentation for a loan.

Although some executives are optimistic about EV growth, uncertainty remains about whether Trump would support miners or follow Project 2025’s limits in a second term, leading to anxiety among executives making long-term decisions.