The U.S. Energy Department will lend ioneer Ltd. $700 million to build the Rhyolite Ridge lithium mine in Nevada.

The loan was approved by Energy Secretary Jennifer Granholm. It is the first loan by the U.S. government for a lithium mining project and represents a major step forward in President Joe Biden’s ambitions to create a domestic supply chain for electric battery materials.

“The government is sending a strong signal that it's time to let us go build this mine,” James Calaway, ioneer's executive chairman, told Reuters. “We now have the capital to build a very important facility to supply lithium for the United States.”

Reuters reported that the loan was in review for more than two years by the department's Advanced Technology Vehicles Manufacturing (ATVM) program office and is conditional on permitting and other factors. The funds would be used to build a lithium carbonate processing facility at the Rhyolite Ridge site near an existing lithium operation run by Albemarle Corp.

A 2020 study had estimated the mine's cost at about $785 million. Calaway said Australia-based ioneer would need to update that amount in light of recent inflation.

The mine would produce enough lithium to build 370,000 EVs each year and reduce annual gasoline consumption by nearly 145 million gallons, the Energy Department said.

Ford Motor Co (F.N) and Prime Planet Energy & Solutions, a joint venture of Toyota Motor Corp (7203.T) and Panasonic Corp (6752.T), have agreed to buy lithium from the project.

The formal stage of the project’s permitting process began last month after the U.S. Fish and Wildlife Service declared Tiehm’s buckwheat, a rare flower at the project site, an endangered species.

The company has said it believes it can develop the mine while protecting the flower. The Energy Department said the loan is contingent on ioneer completing the environmental review process.

The department also noted that ioneer changed its mine plan to avoid the buckwheat and has spent more than $1 million on botanists, greenhouses and related studies.

“The plant’s best chance is with us taking care of it,” Calaway said.

 Photo credit: ioneer