The transition to critical minerals will require a hefty dose of funding. The Department of Energy (DOE) was apparently listening. DOE plans to inject a $1 billion loan into the lithium industry. That is exactly what miners need to further the transition to alternative energy.
“The United States Department of Energy (DOE) is currently in talks with Canadian mining company Lithium Americas over a massive round of funding for its Nevada project,” OilPrice.com. “If the deal – the terms of which are currently being finalized – is inked, it would fund over half and as much as 75% of construction costs for the massive Thacker Pass project, thereby kickstarting the United States’ lithium era in earnest.”
Government funding to support projects domestically will also help the U.S. become a world leader regarding providing the mineral to the rest of the globe. As such, this will help further alternative energy initiatives at home. But it also helps countries who can look to the U.S. to help supply lithium, a key component when creating electric vehicle (EV) batteries.
“The historic loan would be the single-biggest ever awarded to a mining company by the DOE,” the OilPrice.com report added. The report noted the U.S. lithium sector “has already received a major boost under the Biden Administration, which views homeshoring lithium supply chains as a key part of its climate imperative.”
Get Lithium Mining Exposure
As mentioned, funding in the form of private or public investment plays a crucial role in the proliferation of critical minerals supply like lithium. As such, more lithium mining projects can continue or new ones can start. That helps benefit funds like the Sprott Lithium Miners ETF (LITP ).
The fund seeks to provide investment results corresponding to the total return performance of the Nasdaq Sprott Lithium Miners Index. That index is designed to track the performance of a selection of global securities in this mineral’s industry. That includes producers, developers, and explorers.
As of August 31, about 34% of the fund focuses on mining companies in the U.S. and Canada. The DOE’s $1 billion funding should help provide these companies with the necessary capital investment to help foster growth.
In terms of market capitalization, LITP primarily focuses on mid-cap equities. This offers exposure to companies that can provide growth like small-cap companies. It can also provide the safety of large-cap companies with stronger fundamentals.
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