Concerned that former President Donald Trump, if re-elected, would hinder the energy transition in the United States and subsequently cut off funding to the mining industry, American mineral producers, including battery recyclers, are striving to secure government loans worth billions of dollars before January next year.
According to a report from Reuters on Thursday, August 29th, this year’s sharp decline in the prices of lithium, nickel, and other minerals, coupled with lower-than-expected sales of electric vehicles, has led financiers to feel panic. This urgency has pushed the traditionally conservative mining industry to seek support from Washington to grow and compete against what the West perceives as market manipulation by China.
Currently, under President Biden’s administration, the Loan Program Office (LPO) of the U.S. Department of Energy has already approved nearly $25 billion in conditional loans to 21 companies.
The companies set to receive these loans include Li-Cycle, Ioneer, Lithium Americas, Redwood Materials, and others planning to build battery recycling facilities or process lithium and other minerals for electric vehicles.
Given Trump’s promise to “end the electric vehicle mandate” and the former Trump administration officials’ plans outlined in Project 2025 to shut down LPO, mining companies and other firms are eager to secure loans before Biden steps down in five months.
However, these conditional loans still require final approval, which takes time. Each loan, with an average amount of $1 billion from LPO, must go through rigorous review processes involving engineers, financial experts, and even Energy Secretary Jennifer Granholm before funds are dispersed.
Despite the urgency, interviews conducted by Reuters with over twenty industry executives, consultants, investors, analysts, and policymakers revealed that some companies may not be able to obtain loans in time.
These sources all express that without this financial support, many crucial domestic mining projects could be stalled at the planning stage, potentially weakening the Western electric vehicle supply chain. This could allow China-linked competitors to flood the global market with cheap metal supplies, thereby increasing their market share.
Three insiders familiar with the situation have indicated that due to the need for strict assessment of each project’s credit rating and other factors, LPO staff have informed applicants that many pending loans may not be finalized before January next year, likely requiring the next president to handle the majority of the loans.
One executive awaiting LPO loans described Trump as a “wild card,” emphasizing the company’s strong desire to secure the loan before the new president takes office in January.
Heidi Heitkamp cast a decisive vote on the Inflation Reduction Act (IRA) in 2022 and is expected to continue enforcing many of Biden’s climate and energy policies. However, her assistant informed Reuters reporters that her stance on energy proposals is ambiguous.
During his first term, Trump only granted LPO loans to one nuclear project in Georgia, which had previously received funding during the Obama administration. Although the Trump administration updated loan policies in the final month in office to invite crucial mining projects to apply for loans, LPO was largely neglected during other times of Trump’s tenure.
Sources claim that uncertainties surrounding Trump’s potential second term mainly revolve around how he will implement the funding portion of the IRA, which bolsters LPO finances and faced opposition from Trump. Trump cannot unilaterally close LPO, as it is funded by Congress, but he could slow down the loan underwriting process, discouraging applicants.
Another executive seeking LPO loans stated that they believe Trump understands the rising popularity of electric vehicles, a view shared by some Republicans.
A third executive in the loan application process admitted that it is currently unclear whether Trump’s statements on this issue are merely rhetoric or reflect actual policies.
The executives are now left uneasy about Trump’s possible intentions in a potential second term – whether he will recognize the significance of supporting miners and businesses through American industrial policy or align more closely with the goals of Project 2025. This uncertainty is unsettling for those executives who must make decisions now that could affect their companies for years to come.
The Department of Energy emphasizes that LPO loan projects have been “bridging the gap to banks for American entrepreneurs and innovators” for close to two decades, with a key priority of “prudently managing taxpayers’ money.”
The Department also states that federal projects like theirs will continue to be implemented even amid changes in government.