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Source: US government will take 5% of Lithium Americas, and a joint venture with GM.

A source familiar with the negotiations has confirmed that the U.S. Department of Energy is taking a 5% share in Lithium Americas as well as a separate 5% in its joint venture Thacker Pass Lithium Mine with General Motors.

After-hours trading in New York on Wednesday saw shares of Vancouver-based Lithium Americas rise 34% after stake negotiations were completed.

The Trump administration will make this investment, which follows recent investments in Intel and MP Materials. It is a bid to boost industries deemed vital to U.S. security.

Last week, it was reported that officials from the administration were in talks with Lithium Americas regarding an equity stake, as they renegotiated the terms of a government loan of $2.26 billion for the mine. The mine is slated to be the largest source of battery metal lithium within the Western Hemisphere.

Lithium Americas representatives and GM representatives were not available for immediate comment.

Chris Wright, the U.S. Energy secretary, said on Bloomberg TV Tuesday that Washington will take a stake. The percentage of the stake and the separate stake within the GM joint-venture have never been disclosed.

Earlier, it was reported that the government, which will be acquiring the stakes through no-cost warrants and the loan's repayment schedule, has requested an unspecified equity amount during recent discussions.

Lithium Americas, in response to this request and to secure the initial tranche of loan financing, offered last week the government warrants at no cost that would equal 5% to 10% its common shares.

According to a source, the terms of the investment were finalized last week, and even yesterday.

GM is a company that

Invested $625 Million in the Mine

Last year, for a stake of 38%, the company has the right to purchase all the lithium produced in the first phase of the project and a portion in the second phase over a period 20 years.

Initially, administration officials wanted a guarantee from GM that it would purchase the metal, regardless of the market conditions. The automaker refused, and this led to the request for an equity stake, as previously reported.

Both Republicans and Democrats have long praised the Thacker Pass project as a way to increase U.S. production of critical minerals and reduce reliance on China.

Albemarle, a Nevada-based company, produces less than 5 metric tons (5,000 pounds) of lithium. Thacker Pass’s first phase will produce 40,000 metric tonnes of battery-quality Lithium Carbonate per year. This is enough to power up to 800,000.

China is the world's third largest producer of lithium, after Australia and Chile, with an annual production of more than 40,000 tons. China's influence in the refining industry is much greater, as it converts over 75% (of all lithium) into battery-grade materials. (Reporting and editing by Ernest Scheyder, Veronica Brown, David Gregorio).

(source: Reuters)