Lithium Americas soars 90% as Washington considers stake

By Arunima Kumar and Purvi Agarwal

Sept 24 (Reuters) - Shares of Lithium Americas LAC.TO, LAC.N jumped nearly 90% on Wednesday after Reuters reported that the Trump administration is seeking up to a 10% stake in the miner, in the latest sign of Washington's intervention into industries it considers critical to national security.

Late Tuesday, Reuters cited two people familiar with the talks who said the administration is considering the stake as part of negotiations over a $2.26 billion Department of Energy loan for the company's Thacker Pass lithium project in Nevada, the largest planned lithium mine in the Western Hemisphere.

Canada-based Lithium Americas said on Wednesday it was in discussions with the U.S. energy department and General Motors GM.N over the Thacker Pass loan.

The move underscores President Donald Trump's increasing use of direct government ownership to steer strategic sectors and curb reliance on China, which dominates refining of many critical minerals.

China produces over 40,000 metric tons of lithium annually, ranking third after Australia and Chile, but dominates refining, processing more than 75% of the world's lithium into battery-grade material.

TD Cowen analysts said a government stake would lend credence to the Thacker Pass project completion and expansion to multiple phases with perhaps enhanced economics.

The project is seen as a linchpin in building a domestic supply chain part of Washington's long-standing drive to boost U.S. production of lithium, a metal used to make batteries for electric vehicles and other electronics.

The Trump administration recently moved to take a stake in chipmaker Intel INTC.O following a deal that would make the Department of Defense the largest shareholder in rare earths MP Materials MP.N.

Jefferies said the administration's preference for equity stakes, viewed as lower political cost than tax increases, can support financing, corporate profits, and favorable returns on invested capital.

Lithium Americas' Canadian and U.S.-listed shares were both up about 90% at C$8.04 and $5.80, respectively. The company had a market value of $744.5 million as of last close on the New York Stock Exchange.

OFFTAKE AGREEMENTS KEY

GM, which invested $625 million in the mine last year for a 38% stake, has the right to buy all of the project's lithium from its first phase and a portion from the second phase for 20 years, although Trump officials are now seeking a guarantee that GM will buy the metal, according to the sources.

NBCFM Research analyst Mohamed Sidibe said the MP Materials-DoD model shows how government equity, long-term offtake, and price support can derisk strategic projects.

He added for Lithium Americas, a similar approach could strengthen funding and project durability, though it may dilute existing shareholders.

The Thacker Pass project is expected to begin production in 2028.

Morningstar analyst Seth Goldstein said an equity stake could include offtake price guarantees, potentially making Thacker Pass profitable even if lithium prices remain lower for longer.

The news also lifted other lithium miners in premarket trading. Albemarle ALB.N gained 5.5% while Sigma Lithium SGML.O climbed 9%. U.S.-listed shares of SQM SQM.N rose 3.3%.