TMTPOST --   The U.S. government on   Tuesday   confirmed it is taking further steps to   boost the supply   chain of critical minerals.

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The U.S.   government agreed to acquire a stake in Lithium Americas Corp.,   helping   fund   the   Canadian company   as it   develops   its Thacker Pass lithium   project in Nevada, Secretary of Energy Chris Wright   said in a Bloomberg interview, noting   the move   was necessary to help counter China's control of the lithium market.

Lithium Americas   later Tuesday announced it   has reached   a non-binding agreement in principle   with   the U.S.   Department   of Energy   ( DOE )   to advance the first draw   of $435 million   ( First Draw )   on the previously unveiled $2.26   billion   DOE   loan. The previous   DOE loan,   finalzied by the Biden administration a year ago,   is helping to finance construction of a lithium carbonate processing plant, adjacent to the $2.2 billion mine, one of the U.S. most promising opportunities to produce the metal that ’ s used in electric-vehicle batteries, solar panels and wind turbines.

As part   of   key   provisions of the agreement,   the DOE has agreed to defer $182 million of debt service over the first five years of the DOE Loan.   In return, the   DOE will receive 5% equity stake in the Lithium Americas   through warrants to purchase common shares of the company at an exercise price of $0.01 per share, and a   separate   5% stake in its joint venture   ( JV )   with General Motors   Holdings   LLC   ( GM )   in the Thacker   Pass   lithium project   ( Project ) .

Lithium Americas   under   the deal will post an additional $120 million to DOE Loan reserve accounts, to be funded within 12 months of the DOE advancing First Draw.   GM will provide additional support to the Project by amending its lithium offtake agreement with the   JV   to permit the JV to enter into additional third-party offtake agreements for certain remaining production volumes not forecasted to be purchased by GM.

Once the DOE exercises the JV warrants in full, the JV economic interests will,   prior to funding of the additional $120 million reserve accounts discussed above,   be 59% held by Lithium Americas, which will continue to be the manager of the Project, 36% by GM and 5% by the DOE, with voting interest in the JV remaining 62% for Lithium Americas and 38% for GM.

The total   value of   the deal was not   disclosed. Lithium Americas    shares rocked as much as 41% in aftertrading   hours on Tuesday.

Lithium Americas   CEO   Joanathan   Evans said   the company, together with its partners, is onshoring large-scale U.S. lithium production, strengthening America ’ s supply chain. The Thacker Pass project   will reduce U.S. dependence on imported lithium and can support domestic manufacturing across many industries, such as aerospace, defense and electrical grid resiliency, in addition to automotive, said   Shilpan Amin, Senior Vice President Global Chief Procurement and Supply Chain Officer of GM.

The deal reflects the Trump administration is wielding power of the state   to bolster critical mineral companies. The   Pentagon ’ s equity   stake in U.S. rare earth miner   MP Materials   announced nearly   two months ago has   investors   wondering   where the government might invest next.

MP Materials   on July   10   said the Defense Department will become   its largest shareholder   after it   agreed to   buy $400 million of its   preferred stock.   MP Materials owns the only operational rare earth mine in the U.S. at Mountain Pass, California, about 60 miles outside Las Vegas. Proceeds from the Pentagon investment will be used to expand MP ’ s rare earths processing capacity and magnet production, the company said.

The White House is "not ruling out other deals with equity stakes or price floors as we did with MP Materials, but that doesn ’ t mean every initiative we take would be in the shape of the MP deal," a   government official   told CNBC   on Sunday.  

Other critical minerals like lithium, cobalt and graphite are ripe for federal investment to smooth out volatile price fluctuations that undermine U.S. miners, according to   Rich Nolan, CEO of the National Mining Association. Something "in the ballpark" of the MP deal could apply to the lithium sector   said   Kent Masters,   CEO   of North Carolina-based   Albemarle, one of the world ’ s largest lithium producers.