The White House is pursuing up to 10% in Lithium Americas (TSX: LAC) as the Canadian miner renegotiates its US$2.26 billion (A$3.42 billion) Department of Energy loan for the Thacker Pass lithium project.
Lithium Americas' shares surged 95% to close at $6.01 on Wednesday on the back of reports of the government's interest - a move that appears part of a broader pattern reshaping Washington's engagement with private industry akin to sovereign wealth fund mechanisms.
An interest in Lithium Americas would be Washington's third such deal after forking out US$8.9 billion for a 9.9% slice of Intel and a $400 million Defense Department position in MP Materials.
Trump eyes critical industries
United States President Donald Trump signed an executive order in February to establish a sovereign wealth fund - entities primarily used by nations with vast resources to build strategic investment capabilities.
Norway leads the world in these with an enormous $1.8 trillion in assets, while China and multiple Middle East nations also operate substantially large funds.
How Trump's approach differs from traditional funds of its type is by targeting critical supply chains rather than broad market plays.
The Intel arrangement is structured as a passive 9.9% holding with no board representation or governance rights, whereas MP Materials saw the Pentagon become the largest shareholder with a 15% chunk and agreements to buy 100% of magnets from the firm's new Texas facility.
"This is like a down payment on a sovereign wealth fund," National Economic Council Director Kevin Hassett explained when discussing the Intel investment.
"I'm sure that at some point there'll be more transactions, if not in this industry then other sectors."
The Lithium Americas negotiations follow this blueprint, with Washington seeking ownership in exchange for modified loan terms.
Loan restructure woes
Lithium Americas and GM have had to renegotiate the terms of the loan for Thacker Pass because they did not meet the conditions for the first disbursement.
The company couldn't tick all the boxes Uncle Sam wanted the first time around, and the White House wants to push out some of the loan repayments to later years - and in exchange, they want a piece of the action.
"If we're going to push out part of the repayment into later years, then the administration would like a very small stake of equity to create essentially a cash buffer and eliminate some risk on behalf of taxpayers," a Trump administration official explained.
MP Materials shares have more than doubled since the Defense Department took a 15% stake in July.
Lithium stocks have been getting absolutely smashed, with the lithium carbonate CIF North Asia price falling below $10,000/t in February 2025, dropping 4.5% to $9,550/t.
That was the lowest level since February 2021, a far cry from the heady days of 2022 when prices hit $81,375/t.
Chinese overproduction is driving this carnage, with producers particularly aggressive in expanding capacity as the Middle Kingdom rapidly expanded its mining footprint, boosting domestic output by 55% since 2023 and on track to surpass Australia as the world's top producer by 2026.
America's lithium crown jewel
Thacker Pass sits on the largest known lithium deposit in America and has been under construction for nearly a year, with more than 600 contractors at the site.
The project is slated to become the Western Hemisphere's largest source of lithium when it opens in 2028.
Phase 1 targets 40,000t per year of battery-quality lithium carbonate, construction will create nearly 2,000 direct jobs, and GM has already stumped up $625 million for a 38% slice with rights to buy all the metal from the first phase.
Currently, only 44.7% of U.S. demand for the metal is met by domestic production, rising to 76.4% when including Canadian supply.
The miner confirmed on Wednesday that discussions with the DOE and GM are ongoing regarding the first draw on the loan, with no timeline provided for finalising terms.
