Washington: The US government has acquired a 5% equity stake in Canadian mining firm Lithium Americas, a key producer of lithium used in electric vehicle (EV) production and batteries. This strategic move is part of a broader effort to enhance domestic production capabilities and reduce reliance on foreign sources for critical minerals.

According to Anadolu Agency, Vancouver-based Lithium Americas announced late Tuesday that it had reached an agreement with the US Department of Energy (DOE) to draw down the first $435 million of a previously announced $2.26 billion loan. This loan is aimed at supporting the development of the Thacker Pass facility in the United States. As part of the agreement, the DOE will also take a separate 5% stake in the Thacker Pass project, a joint venture between Lithium Americas and General Motors.

Lithium Americas CEO Jonathan Evans emphasized the importance of the support from the US Administration, General Motors, and their partners. He highlighted that this collaboration is a significant step toward onshoring large-scale US lithium production, strengthening the country's supply chain, and enhancing long-term energy security and prosperity.

This acquisition aligns with Washington's ongoing efforts to reduce its dependence on China for lithium, a critical component in the production of EV batteries. In a similar vein, the US government is working to secure control over chip manufacturing, as evidenced by its recent acquisition of a 10% share in chip producer Intel. Additionally, in July, the Department of Defense acquired a 15% ownership share in MP Materials, a rare earth mining company.

The announcement of this agreement has positively impacted the market, with shares of Lithium Americas surging 32% in after-hours trading on Tuesday.

The Thacker Pass project, located in Nevada, is considered one of the world's richest lithium reserves. It is deemed critical to reducing the US's dependence on foreign sources for critical raw materials. Once operational in 2028, the facility is expected to become the largest lithium production center in the Western Hemisphere.

General Motors, an automaker involved in the project, plans to utilize the extracted raw material in its electric vehicles. Last year, General Motors invested $625 million for a 38% stake in the mine. The company has secured a 20-year preemptive right for all lithium production from the first phase and a portion of the second phase.