DOE commits $700M for Rhyolite Ridge
Metal Tech News - January 16, 2023
Last updated 1/21/2023 at 2:38pm
Conditional loan signals a major step forward for ioneer's planned lithium-boron mine in Nevada.
As part of the Biden administration's ongoing effort to support projects that will provide a domestic supply of the minerals and metals critical to America's transition to clean energy and transportation, the U.S. Department of Energy has committed to loaning ioneer Ltd. up to $700 million to develop the Rhyolite Ridge lithium-boron project in Nevada.
"Rhyolite Ridge is a major step towards bolstering domestic lithium production for clean energy technologies, and LPO is excited to further develop an environmentally responsible U.S. supply chain for critical materials," said DOE Loans Program Office Director Jigar Shah.
Situated about 200 road miles southeast of the Tesla Gigafactory Nevada, Rhyolite Ridge is slated to produce enough battery-grade lithium hydroxide for roughly 370,000 electric vehicle batteries annually, plus significant quantities of the boric acid needed for several key climate technologies over an initial 26-year operation detailed in a 2020 feasibility study for the project.
The sale of boric acid as a byproduct is expected to drive down the costs of producing lithium hydroxide at the Nevada mine and processing facility to $2,510 per metric ton. When you consider that rapid ramp-up of EV battery manufacturing has driven the price for a metric ton of lithium above $70,000, 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 in 2021 to invest $490 million into Rhyolite Ridge in exchange for a 50% joint venture interest in this compelling lithium-boron project.
The $700 million from the federal government, which is contingent on Sibanye Stillwater's financial participation in the project, marks a major milestone for the Rhyolite Ridge partners.
"Rhyolite Ridge is a world-class lithium project which is ideally positioned to provide locally mined and beneficiated metals to further develop the U.S. battery ecosystem," said Sibanye-Stillwater CEO Neal Froneman. "The proposed loan represents a significant step towards further de-risking funding and ultimately progressing Rhyolite Ridge to production."
DOE's proposed loan for Rhyolite Ridge is being made under the department's Advanced Technology Vehicles Manufacturing (ATVM) loan program in support of the Biden administration's critical minerals strategy.
After presenting a compelling case for Rhyolite Ridge during pre-application consultation with DOE's loan office early in 2021, ioneer submitted in-depth project engineering, financial, and commercial information in order to demonstrate the Nevada lithium-boron project is eligible for funding under ATVM.
Satisfied with the technical and financial parameters detailed in the Rhyolite Ridge feasibility study, DOE Loan Programs Office initiated a third-party due diligence process in March 2022.
After nearly a year of detailed market, technical, and legal due diligence, DOE determined that Rhyolite Ridge has the potential to offer a responsible source of lithium and boron that supports the U.S. economy while providing jobs to American workers.
"LPO's loan to the Rhyolite Ridge project would finance the on-site processing of lithium carbonate that could potentially support production of lithium for approximately 370,000 EVs each year," DOE Loan Program Office penned in a Jan. 13 statement. "This project could reduce annual gasoline consumption by nearly 145 million gallons and prevent the release of 1.29 million tons of carbon dioxide each year. The Rhyolite Ridge project is projected to create up to 600 construction jobs and approximately 250-300 operations jobs."
Finalization of the loan is conditional upon:
• The issuance of a positive record of decision for Rhyolite Ridge by the U.S. Bureau of Land Management.
• A cost estimate that reflects anticipated cost increases since 2020 and a P85 cost contingency, which is a contingency to the base estimate that achieves an 85% probability of covering all costs.
• Updated resource and reserve statements and mine plan that incorporates a southern extension to the Rhyolite Ridge deposit.
• An updated economic model based on the expanded reserves and new mine plan.
• All necessary permits.
• Final investment decisions by ioneer and Sibanye-Stillwater.
"The conditional commitment is the culmination of 23 months of discussions with and due diligence by the Loan Programs Office and it represents a significant milestone for Rhyolite Ridge," said ioneer Managing Director Bernard Rowe. "We look forward to working with the DOE and Sibanye-Stillwater to complete the remaining milestones to start construction of Rhyolite Ridge."
The next major milestone for Rhyolite Ridge will be a final record of decision for the proposed lithium-boron operation by the U.S. Bureau of Land Management, which would mark the culmination of the federal permitting process under the National Environmental Policy Act (NEPA).
Having already received the two other major permits for Rhyolite Ridge, air quality and water permits issued by Nevada, a positive record of decision by BLM is expected to be the final hurdle before development could begin.
BLM is currently on pace to issue its final Rhyolite Ridge Record of Decision early in 2024.
Once permits are issued, it is expected to take about two years to develop the mine and facilities at Rhyolite Ridge.
This means that Ford Motor Company, Prime Planet Energy & Solutions (a joint venture between Toyota Motor Corp. and Panasonic Corp.), and others that have already entered into agreements for Rhyolite Ridge lithium could see their first deliveries from the Nevada project in 2026.
In the meantime, ioneer and Sibanye-Stillwater will continue to make headway on the other conditions of the DOE loan so that they are positioned to move forward with advancing the development of an optimized mine at Rhyolite Ridge in 2024.
"We look forward to working with the DOE and Sibanye-Stillwater to complete the remaining milestones to start construction of Rhyolite Ridge," said Rowe.
The Rhyolite Ridge project detailed in the 2020 feasibility study is engineered to produce 22,000 metric tons of battery-grade lithium hydroxide and 174,400 metric tons of boric acid per year.