Q&A: Ioneer boss Bernard Rowe on the benefits of the US investing big bucks in the domestic lithium supply chain
The US is pushing hard to develop a domestic lithium supply chain, and Ioneer (ASX:INR) reckons its Rhyolite Ridge lithium-boron project in Nevada will carve out a nice slice of the American market.
The company has already nabbed an offtake deal with Ford for the supply of 7,000tpa of lithium carbonate over a five-year term, starting in 2025, a deal with PPES to supply 4,000tpa of lithium carbonate from Rhyolite Ridge for a period of five years, along with Eco Pro Innovation – a cathode supplier for global battery manufacturers – who’ll pick up 7,000 tpa.
Not to mention INR’s recent three-year offtake agreement with energy storage company Dragonfly Energy Holdings for surplus tonnes available after meeting its other offtake commitments.
But the company is also benefiting through funding, in January securing a loan up to US$700 million from the US Department of Energy (DOE) as part of the US drive to achieve long-term critical mineral supply chain security.
Stockhead spoke with MD and CEO Bernard Rowe who said Ioneer is seeing a political shift in America in terms of permitting reforms, access to development capital and downstream incentivising.
The US is investing big in the domestic supply chain, what kind of opportunities does that create for the industry?
“We are seeing a strong shift in political support in terms of permitting reforms, which has the potential to improve the permitting approvals timeline for new projects,” Rowe said.
“Demand from EV vehicle and battery OEMs to source domestic raw materials is being driven by tax incentive provisions in the Biden Administration’s Inflation Reduction Act (IRA). In addition, the US Department of Energy (DOE) Loan Programs Office is offering access to a significant amount of low-cost capital, which is evident in their conditional commitment to INR for a loan of up to US$700m at US Treasury rates over 10-year terms.
“Support across three key areas such as permitting efficiency, access to and cost of development capital plus boosting demand through downstream incentivising is extremely helpful for companies like Ioneer to confidently pursue the development of new projects and support the growing domestic US EV battery supply chain.”
What does the recent up to US$700m loan from the DOE mean for the company?
“We consider the DOE conditional loan commitment to be the most significant milestone for the company to date,” Rowe said.
“The offer is a result of two years of detailed due diligence and means that, coupled with the expected US$490m equity contribution from our Joint Venture partner Sibanye-Stillwater, we now have conditional commitments of almost US$1.2b in place to develop the Rhyolite Ridge project.
“In addition, the DOE loan offer also came with a very strong permitting endorsement by director of the DOE Loan Programs Office, Jigar Shah, who publicly stated, ‘the loan is intended to ‘provide assurances to equity investors’ that the administration believes the project has ‘a pathway forward’ to obtaining the permit.”
How close is the company to a Final Investment Decision? Are you on track for first production in 2026?
“There are several key milestones to achieve ahead of reaching FID including updating our April 2020 DFS and economic model as well as receiving a Record of Decision on final permitting, which we anticipate by Q1 2024,” Rowe said.
“Assuming a positive permitting outcome, we are targeting FID in Q2 2024.
“Detailed engineering design and procurement are key work streams as we head towards final permitting and FID, and we are around 80-85% complete so they are progressing very well.
“The key aim of ongoing engineering activities is to support construction mobilisation following the Full Notice to Proceed (FNTP) award that will follow a Final Investment Decision (FID).
“Procurement activity has focused on long lead items and items required for initial construction.
“We continue working closely with our EPCM contractor, Fluor, who are doing a fantastic job.
“We are confident that we are on track and will be construction ready.”
The Rhyolite Ridge MRE was recently updated, is there more potential to grow with the South and North basin projects?
“Absolutely, there is significant organic growth potential at both the North and South Basins,” Rowe said.
“We recently increased our Mineral Resource estimate for the South Basin to 360Mt (+145%) containing 3.4Mt (+168%) of Lithium Carbonate Equivalent and 14.1Mt (+18%) of Boric Acid.
“Our previous Resource estimate was exclusively lithium and high-boron mineralisation.
“We have now included additional sedimentary layers of lithium with low-boron mineralisation that stack vertically within the same resource area under our current permitting application.
“The mineralisation is open in three directions to the North, East and South with the 3km2 Resource area covering approximately 40% of the South Basin’s 8km2 total prospective area.
“Additionally, the North Basin has a total prospective area of 14km2, over four times larger than our recently updated South Basin Mineral Resource footprint.
“It was drilled by Rio Tinto (US Borax) in the 1990s and we validated their drilling with two holes in 2016, which confirmed medium grade lithium mineralisation from surface with intersections of up to approximately 200m.
“So far, the North Basin has received very little attention and is underexplored, however it remains one of our key organic growth opportunities.”
Is there anything else you would like to add?
“We recently announced a lithium offtake agreement with Dragonfly, which is our first with a local Nevada-based battery manufacturer,” Rowe said.
“We are very pleased to be able to reach this agreement, which is mutually beneficial not only for Ioneer and Dragonfly but also the state of Nevada, as it demonstrates that some of the lithium from Rhyolite Ridge will be used for domestic US battery manufacturing in the state where our project is located.”
At Stockhead we tell it like it is. While Ioneer is a Stockhead advertiser, it did not sponsor this article.