ioneer secures $700m US government loan for Rhyolite Ridge lithium-boron project

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By Imelda Cotton - 

The US Department of Energy (DOE) has agreed to lend Australian company ioneer (NASDAQ: IONR) up to $700 million to build its Rhyolite Ridge lithium-boron project in Nevada.

The department’s Advanced Technology Vehicles Manufacturing office has finalised a term sheet and conditional commitment for the loan to fund construction of the project’s onsite lithium processing facility.

The deal has been locked in at the 10-year US bond rate for a term of 10 years.

It is reported to be the first-ever DOE loan for financing of a mining project’s processing component where lithium is extracted and refined at site.

It will be coupled with an equity contribution from joint venture partner Sibanye-Stillwater to secure a 50% interest in the project.

The total is expected to fund a substantial part of the $785 million preliminary capital expenditure estimate for Rhyolite Ridge.

“The conditional commitment highlights Rhyolite Ridge’s strategic role in strengthening America’s critical mineral supply chain in providing a secure, sustainable, and reliable domestic source of lithium for the growing electric vehicle ecosystem,” ioneer executive chairman James Calaway said.

Project permitting

The loan deal follows nearly two years of extensive and detailed technical, legal and market due diligence by the DOE.

It is subject to a series of conditions, including a final investment decision by ioneer and receipt of all necessary permits.

In December, ioneer confirmed Rhyolite Ridge had advanced to the final stages of the federal permitting process.

Largest and cheapest

The size of ioneer’s loan is believed to be the largest and cheapest of all recent critical minerals deals between Australian companies and the US Government.

These include a $120 million contract between Lynas Rare Earths (ASX: LYC) and the Department of Defence, as well as $350 million in grants to Syrah Resources (ASX: SYR) for the development of a natural graphite facility in Louisiana.

Completion of funding

ioneer executive chairman James Calaway said the loan represents a significant step towards completion of funding for Rhyolite Ridge.

“This agreement highlights the strategic role [our project will play] in strengthening America’s critical mineral supply chain,” he said.

“We expect it will provide a secure, sustainable and reliable domestic source of lithium for the growing electric vehicle ecosystem.”

Domestic battery supply chain

The DOE’s support of Rhyolite Ridge reflects a broader commitment by the US government to strengthen its domestic battery supply chain and electrify the transportation sector, thereby reducing the reliance on fossil fuels and foreign supply of raw materials.

“The urgency to secure critical materials for batteries is expected to rapidly increase in the coming years as demand for lithium is projected to exceed current global production by 2030,” the department said.

“This is subsequently causing US auto manufacturers to seek a robust domestic supply of critical materials to keep pace with the increased demand.”

Known and sizeable deposit

Rhyolite Ridge is one of only two known and sizeable lithium-boron deposits in the world and is expected to be the second lithium mine to developed in the US.

When fully operational, the site is expected to produce enough lithium for up to 400,000 electric vehicles, while also producing boron.

ioneer has already executed offtake agreements with Ford Motor Company, Prime Planet Energy & Solutions and EcoPro Innovation, which is the world’s second-largest lithium nickel-cobalt-aluminum oxide cathode materials manufacturer.

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