The US Department of Energy has taken an unprecedented step in securing America’s critical minerals supply chain by acquiring equity stakes in Lithium Americas Corp. and its flagship Thacker Pass project. This marks a significant shift in government policy, with Washington now directly investing in companies it deems vital to national security.
The move comes as the Trump administration accelerates efforts to reduce dependence on foreign suppliers, particularly China, which dominates global lithium processing. For investors, this government backing has created immediate opportunities, with Lithium Americas shares surging over 23% following the announcement.
US Government Backs Domestic Lithium Production
The US Department of Energy has acquired a 5% stake in Lithium Americas Corp (NYSE: ) and a separate 5% stake in the company’s joint venture with General Motors (NYSE: ) focused on the Thacker Pass mine in Nevada. The government will acquire these stakes through warrants with an exercise price of just one penny, making this essentially a direct equity investment rather than a traditional loan structure.
As part of the deal, Lithium Americas will receive the first tranche of $435 million from a previously announced $2.26 billion Department of Energy loan to support development of the Thacker Pass project.
The government has also agreed to defer $182 million of debt service over the first five years of the loan, providing significant financial flexibility during the critical construction phase.
This deal represents the latest in a series of private sector investments by the Trump administration, following similar government acquisitions in Intel (NASDAQ: ) and MP Materials (NYSE: ). Energy Secretary Chris Wright emphasized the strategic importance, noting that despite having some of the world’s largest lithium deposits, the US produces less than 1% of the global supply. This investment aims to change that dynamic fundamentally.
The Thacker Pass project itself represents a cornerstone of American lithium ambitions. General Motors previously invested $625 million in the mine for a 38% stake and has the right to purchase all of the project’s lithium from its first phase for 20 years. When operational by 2028, the first phase is expected to produce 40,000 metric tons of battery-quality lithium carbonate annually, sufficient for approximately 800,000 electric vehicles.
Why Lithium Matters: The Critical Mineral Powering Modern Technology
Lithium has become indispensable to modern technology and the global energy transition. The mineral is used in batteries that power electric vehicles, cellphones, and numerous other electronic devices, making it a fundamental component of everything from consumer electronics to transportation infrastructure. As electric vehicle adoption accelerates worldwide, lithium demand is projected to grow exponentially over the coming decades.
China currently produces more than 40,000 metric tons of lithium each year, making it the third-largest producer after Australia and Chile. However, China’s true dominance lies in processing rather than mining. China processes over 75% of the world’s lithium into battery-grade material, creating a critical bottleneck in the global supply chain that leaves other nations vulnerable to supply disruptions or geopolitical tensions.
By contrast, the US currently produces less than 5,000 metric tons of lithium annually at a Nevada facility owned by Albemarle (NYSE: ). This massive gap between domestic production and consumption leaves America heavily dependent on imports for a mineral now considered essential to both economic competitiveness and national security. The government’s investment in Lithium Americas represents a direct attempt to close this strategic vulnerability.
Both Republicans and Democrats have championed the Thacker Pass project as a mechanism to boost US critical minerals production and reduce reliance on China. This rare bipartisan consensus underscores how lithium has transcended typical partisan divides to become a matter of national priority, similar to semiconductor manufacturing or defense industrial capacity.
Following the Rally: Market Implications and Investment Considerations
The market response to government backing has been dramatic and immediate. Lithium Americas shares jumped 23.29% to close at $7.04, with the stock hitting an all-time high during Wednesday trading. Trading volume surged to over 211 million shares, nearly nine times the average daily volume of 23 million shares, indicating intense investor interest in the government-backed opportunity.
The stock’s year-to-date return reached 134.67%, dramatically outperforming the S&P/TSX Composite index’s 22.29% gain. Over a one-year period, Lithium Americas has returned 173.93% compared to the benchmark’s 25.27%. However, investors should note that the company’s three-year and five-year returns remain negative at -19.91%, reflecting the volatile nature of both the company and the lithium sector.
Analyst price targets for the stock range from a low of $2.75 to a high of $8.00, with an average target of $5.64. With the current price at $7.04, the stock is trading above even the highest analyst target, suggesting the market may be pricing in significant upside from government support that analysts had not previously anticipated. The company currently has no revenue, shows a net loss of $52.86 million, and maintains negative free cash flow of $433.12 million, making this fundamentally a bet on future production rather than current profitability.
For investors considering exposure to the domestic lithium theme, it’s worth noting that comparable companies in the space include MP Materials Corp., which has a market cap of $12.2 billion and gained 0.83% on the same day, and USA Rare Earth Inc., with a market cap of $2.1 billion and a 7.10% gain.
The government’s strategy of taking stakes in multiple critical mineral companies suggests this sector may see continued policy support, though investors should carefully weigh the execution risks inherent in mining development projects that won’t generate revenue for several years.
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This article was written by Shane Neagle, editor in chief of The Tokenist.