Funding to help build battery-grade lithium project in Nevada Metal Tech News - December 22, 2021
With a "substantially complete" application for a loan to fund the development of its Rhyolite lithium-boron project in Nevada already being processed by the U.S. Department of Energy Loan Programs Office, ioneer Ltd. is positioned to be one of the early beneficiaries of the more than $20 billion in federal loans and loan guarantees available to mining and manufacturing companies along the electric vehicle battery materials supply chain.
Early in 2021, ioneer entered into preliminary talks with the DOE Loan Programs Office about securing funds for the development of a mine and processing facilities at Rhyolite Ridge, which is slated to produce an average of roughly 22,000 metric tons of lithium and 174,400 metric tons of boric acid per year.
This operation, about 200 road miles southeast of Tesla Gigafactory Nevada, would produce lithium carbonate over the first three years before adding a plant that would upgrade this product into battery-grade lithium hydroxide, according to a 2020 feasibility study.
The Rhyolite Ridge mine and processing facilities detailed in this study would operate for 26 years. However, considering this operation extracts less than half of the resources discovered so far, there is the potential to significantly increase production capacity, extend the life of the mine, or both.
The initial capital cost to build the operation outlined in the study, which is nearing the final stages of federal permitting, is estimated to be $785 million. Adding the plant to upgrade lithium carbonate to battery-grade lithium hydroxide will cost another $74 million.
The sale of boric acid as byproduct is expected to drive down the costs of producing this lithium hydroxide to US$2,510 per metric ton. When you consider that the rapidly emerging EV market has driven the price of lithium up to around $31,000 per metric ton, the potential profits for producing this highly demanded lithium-ion battery ingredient at Rhyolite Ridge are considerable.
Sibanye Stillwater Ltd., best known for its platinum group metal mines in Montana and South Africa, entered into an agreement with ioneer in September to invest $490 million into Rhyolite Ridge in exchange for a 50% joint venture interest in this compelling lithium-boron project.
Sibanye Stillwater invested another $70 million to acquire an equity position in ioneer, which provides the smaller company with funds to advance Rhyolite Ridge to construction, which is slated to get underway next year.
Now, Australia-based ioneer's U.S. subsidiary, Ioneer USA Corp., may soon qualify for a federal loan that would provide the balance of the funds to develop this project that would feed enough lithium-hydroxide into U.S. supply chains for approximately 400,000 EVs per year.
If approved, this loan would come from the more than $20 billion of funds the White House has made available to DOE's Loan Programs Office for the support of domestic EV battery materials supply chain projects. This includes more than $3 billion being administered under the DOE Title 17 Renewable Energy and Efficiency Energy Projects for mining, processing, and recycling of critical minerals; and $17 billion via DOE's Advanced Technology Vehicles Manufacturing Loan Program for projects along the EV supply chain.
Further details on the loans and the White House's domestic lithium supply chain strategy can be read at Domestic mining key to Biden EV strategy in the December 15, 2021 edition of Metal Tech News.
After presenting a compelling case for Rhyolite Ridge during pre-application consultation with DOE's Loan Programs Office early in 2021, ioneer submitted in-depth project engineering, financial and commercial information in order to demonstrate this western Nevada lithium project is eligible for funding under the Advanced Technology Vehicles Manufacturing Loan Program.
Satisfied with the technical and financial parameters detailed in the Rhyolite Ridge feasibility study, the DOE Loan Programs Office has invited ioneer to enter into due diligence. This final step of the loan process will include more detailed engagement by the federal loan office and third-party experts ahead of negotiating the loan terms.
"We are pleased to have reached this milestone in our discussions with the U.S. DOE and we look forward to working through due diligence under the ATVM loan program," said ioneer Managing Director Bernard Rowe. "We believe the Rhyolite Ridge project, with its ability to produce lithium materials onsite, will be an integral part of the U.S. electric vehicle supply chain."
With the key Nevada permits already issued and federal authorization under the National Environmental Policy Act expected in the second half of 2022, ioneer currently expects to begin producing lithium carbonate and boric acid at Rhyolite Ridge in 2024.
CORRECTION: This article originally stated the lithium hydroxide price in kilograms. The correct price at the time was $31,000 per metric ton.