Here’s how Lithium Americas hit the battery supply chain jackpot

OROVADA, Nev. — Lithium Americas' construction manager Bentley LeBaron crossed thick mud and snow in a Chevrolet Silverado to reach a remote open field in northern Nevada, the site of a mine that will tap what's estimated to be the largest lithium deposit in the world.

In about three years, excavators will begin scooping up precious lithium ore from the pit site to supply millions of electric vehicle batteries.

Lithium Americas is poised to seize an enormous opportunity — it said it has the only fully permitted new lithium mining project in the U.S. with a clear path to production. General Motors has pledged a $650 million equity investment and has exclusive rights to phase one production for 10 years.

Almost 20 years of exploratory drilling, impact analyses and mapping have helped Lithium Americas to strike this white gold at exactly the right time.

"Everything we do out here, we put a great deal of thought and preparation into it," LeBaron said.

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.

"It's mining at the end of the day," said Corinne Blanchard, a director of equity research at Deutsche Bank.

Western Lithium Corp., which later merged with Lithium Americas, began an exploratory drilling program at Thacker Pass in 2007.

Its efforts coincided with the emergence of modern EVs in the U.S. — vehicles that need huge amounts of lithium for their batteries.

By 2017, the EV market was growing quickly. Americans purchased 104,487 EVs that year, a gain of 20 percent from the previous year, according to the Department of Transportation. They purchased almost 1.2 million last year, according to Cox Automotive. Lithium Americas "timed the development with the largest inflection in EV-related demand growth that we've seen in history," said David Deckelbaum, a managing director at TD Cowen.

Lithium Americas also discovered in 2017 that the Thacker Pass site contained an even larger deposit than previously identified. The clay typically contains higher-grade material than lithium brine.

Thacker Pass is the only clay lithium asset in North America expected to begin production by the end of 2026, according to TD Cowen.

The undertaking at Thacker Pass was one of many natural resource projects with "expedited" environmental review processes during the COVID-19 pandemic. While intended to reduce "the time required for environmental reviews" and eliminate "needless paperwork," according to the Department of the Interior, that expedience also became a source of criticism from community opponents.

Several environmental groups filed lawsuits alleging the streamlined process did not consider environmental impacts. Those groups ultimately lost.

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."

Meanwhile, some Native American tribes say soldiers in the 1st Nevada Cavalry killed between 30 and 50 people on Sept. 12, 1865, at Thacker Pass.

A complaint for one of the tribal lawsuits said that in July 2022, the Bureau of Land Management acknowledged the location of the 1865 massacre "was within the Thacker Pass Lithium Mine Project Area."

"It's a human rights violation," said Michon Eben, the tribal historic preservation officer for the Reno-Sparks Indian Colony.

The company disagrees.

Crowley said "there is no evidence that altercations occurred at the Thacker Pass project site."

The tribal and environmental lawsuits delayed the start of construction and added expenses. Lithium Americas reported that the company paid $10 million to cover general and administrative expenses, including legal fees, during the nine months ended Sept. 30.

That's an increase from the $6.6 million spent during the same period the previous year, though only part of that increase can be attributed to the litigation.

Lithium Americas has entered into a community benefits agreement with the Fort McDermitt Paiute and Shoshone Tribe that includes a promise to build an 8,000-square-foot community center that includes a day care, preschool, playground, cultural facility and greenhouse.

"Respecting the rights, culture, aspirations and interests of all nearby communities is a priority," Crowley said.

Conflicts over the mine's development plans reflect an uncomfortable reality. While a domestic EV battery supply chain should build jobs and economic security and help the nation meet carbon emission reduction targets, mining is a hugely disruptive industrial process often impacting rural populations.

Thacker Pass is not the only mine site that is a source of tension for Native groups. A 2022 study in the journal Nature Sustainability found that more than half of 5,097 energy transition materials resources were "on or near the lands of indigenous and peasant peoples."

Apache tribal members have vocally opposed a copper mine in Oak Flat, Ariz. Indigenous people in the Bristol Bay area of southwestern Alaska celebrated when the U.S. Army Corps of Engineers denied a permit for a gold and copper mine there in 2020.
Overseas, Chilean and Argentine mines have also seen Indigenous-led protests. And non-Native communities have also opposed mines they see as existential threats to a cherished way of life.

Before it pulls the first ounce of lithium at the base of the Montana Mountains here, Lithium Americas has yet more hurdles to overcome. Last week, it received a key Department of Energy loan that will cover about 77 percent of the first phase of capital expenditures — but there are conditions.

The company cannot tap into the loan until it exhausts all other forms of debt and equity for the remaining costs. While its cash on hand and the delivery of part of the GM financial commitment can cover part of the amount outstanding, Lithium Americas still has to come up with about $266 million, according to TD Cowen.

Some of that will have to be raised before the second half of the year to finalize the DOE loan.

While the macroenvironment is challenging, raising that money is likely doable for Lithium Americas, Deckelbaum said.

"There's a variety of things that can be done, and maybe it includes multiple different avenues," but sourcing the remaining money is "certainly meaningfully easier than obtaining" the DOE loan, he said.