Jakarta, IndonesiaSentinel.com — U.S. miners and battery recyclers are in a race to secure billions of dollars in government loans before January, fearing that if former President Donald Trump is re-elected, he might block the funding essential for increasing American production of critical minerals needed for the energy transition.
This year, declining prices for lithium, nickel, and other key minerals, coupled with lower-than-expected electric vehicle (EV) sales, have shaken private investors, leaving the typically risk-averse mining sector in the unusual position of relying on federal support to grow and counter what the West views as China’s manipulation of global markets.
Under President Joe Biden, the U.S. Department of Energy’s Loan Programs Office (LPO) has committed nearly $25 billion in conditional loans to 21 companies, including Li-Cycle, ioneer, Lithium Americas, and Redwood Materials. These companies plan to establish facilities for battery recycling or processing lithium and other minerals crucial for EVs. However, these conditional loans still require final approval, a process that can take time.
Solar companies, such as South Korea’s Qcells, and hydrogen firms, including Plug Power, have also been awarded conditional loans. Their operations depend partly on a domestic supply of critical minerals, making the financing of mining projects vital to the U.S. energy transition.
The average LPO loan is $1 billion, and each loan undergoes extensive review by various government bodies, including engineers, financial experts, and Energy Secretary Jennifer Granholm, before the funds are released.
With Trump promising to “end the electric vehicle mandate” and the Project 2025 document, crafted by his former administration officials, outlining plans to close the LPO, mining companies and others are scrambling to finalize loans before Biden’s term ends in five months. However, according to interviews with over two dozen industry executives, consultants, investors, analysts, and policymakers, some loans may not be completed in time due to the tight deadline.
Without these crucial loans, many domestic critical minerals projects could be halted at the planning stage, potentially crippling the Western EV supply chain as China-linked competitors flood global markets with cheaper metal supplies.
One executive with a loan application pending at the LPO described Trump as “a wild card,” emphasizing the urgency of securing their loan before a new president takes office in January. This executive, along with four others interviewed for this article, requested anonymity to avoid offending Trump, a Republican, or Vice President Kamala Harris, his Democratic opponent in the November 5 election.
While Trump has distanced himself from Project 2025, much of its energy-related content was drafted by his former aides.
LPO officials have reportedly informed applicants that many outstanding loans might not be finalized before January due to the need for thorough scrutiny of each project’s creditworthiness and other factors, meaning that most loans will likely be handled by the next administration, according to sources familiar with the discussions.
The Harris and Trump campaigns did not respond to requests for comment.
The U.S. Department of Energy, which oversees the LPO, stated that the loan program has “provided a bridge to bankability for American entrepreneurs and innovators for almost 20 years” and emphasizes “responsible stewardship of taxpayer money.”
“Federal programs like ours routinely continue across administration changes,” said a spokesperson for the Energy Department.
Harris, who cast the deciding vote for the Inflation Reduction Act in 2022, is expected to continue many of Biden’s climate policies, though her aides have indicated she is being strategically vague about energy proposals.
The LPO, which employed around 90 people when Biden and Harris took office in January 2021, now employs about 400.
During his first term, Trump approved only one LPO loan, which went to a Georgia nuclear project that had already received loans under President Barack Obama. The LPO was mostly inactive during the rest of Trump’s term, although his administration did update lending policies a month before leaving office to invite critical minerals projects to apply.
Much of the uncertainty regarding a potential second Trump term revolves around how he would handle the funding provisions of the Inflation Reduction Act, which increased LPO funding but was opposed by Trump. Although Trump cannot unilaterally close the LPO since it is funded by Congress, he could slow the loan approval process to such an extent that applicants might abandon their projects.
Plug Power, which is developing multiple hydrogen plants in the U.S., said it is working closely with the Energy Department to finalize its $1.66 billion loan. “Given the resilience of [Department of Energy] programs through previous administration changes, we remain confident that subsequent administrations will continue to support projects that have received prior conditional approval,” said Andy Marsh, Plug Power’s CEO, in a statement to Reuters.
MINING PROJECTS
The LPO, which provided Tesla with a $465 million loan in 2010 to help avoid bankruptcy, has been thorough in its loan review process under Biden, with over two-thirds of applicants requiring assistance navigating the complex credit review process, which slows down the loan approval timeline, LPO chief Jigar Shah told Reuters last year.
For U.S. mining projects, any delay in funding could jeopardize plans to supply cathode and battery facilities, many of which are also awaiting LPO funding.
In Nevada, ioneer is working to close a $700 million LPO loan for its Rhyolite Ridge lithium project, which is estimated to cost over $1 billion. General Motors-backed Lithium Americas has begun construction on its nearly $3 billion Thacker Pass lithium project, which Trump approved five days before leaving office. The bulk of the project’s funding is expected to come from a $2.26 billion LPO loan that the company aims to finalize by December.
“We’re pleased that our project was supported by both the Trump and Biden administrations,” a spokesperson for Lithium Americas said. “Both have recognized the importance of Thacker Pass in securing a domestic supply of critical minerals.”
Australia-based ioneer did not respond to requests for comment.
Recycling startups Li-Cycle and Redwood are also hurrying to finalize their LPO loans. Redwood was conditionally approved for a $2 billion loan last year but is still awaiting funding.
Li-Cycle stated that it continues “to work closely with the U.S. Department of Energy on key technical, financial, and legal workstreams to advance towards definitive financing documentation for a loan.”
Representatives for Redwood and Qcells did not respond to requests for comment.
Another executive with a pending loan expressed confidence that Trump understands the growing popularity of EVs, a sentiment echoed by some Republicans.
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However, whether Trump would support using U.S. industrial policy to back miners and others in a potential second term—or align more closely with Project 2025’s objectives—remains a source of concern for executives making decisions that will impact their companies for years to come.
A third executive with a pending loan said it was unclear whether Trump’s statements on the subject were “rhetoric or actual policy.”
(Ray)
