On Wednesday, lithium stocks and ETFs listed in the US saw significant gains following reports that the US government is in negotiations with Lithium Americas Corp (LAC.US) to restructure a $2.3 billion Department of Energy loan through an equity participation arrangement, a move that could benefit miners and project developers. As of press time, Lithium Americas Corp surged 71.50% at market open, trading at $5.27.

The news sent ripples throughout the entire industry, which has experienced months of volatility due to widespread and prolonged supply disruptions from China, though later reports indicated that major Chinese mines would restart operations earlier than expected. However, Lithium Americas Corp appears to have restored some optimism to the sector.

Following reports that the Trump administration is seeking to acquire up to 10% equity in the company, its stock price soared 70% in pre-market trading. This development stems from the US government's renegotiation of the terms for its $2.3 billion Department of Energy loan for the Thacker Pass lithium project.

The approximately $3 billion Thacker Pass project received approval at the end of Trump's first term, while the Department of Energy's loan program office disbursed the loan under the Biden administration last year. Lithium Americas Corp had originally planned to make its first drawdown on this loan earlier this month, but Trump administration officials, concerned about the company's repayment capacity given current weak lithium prices, are seeking to renegotiate the loan terms.

General Motors invested $625 million in the mine last year, acquiring a 38% stake and securing rights to purchase all lithium production from the first phase and partial production from the second phase of the Thacker Pass project over 20 years. However, Trump administration officials are currently demanding purchase guarantees from General Motors.

General Motors relies on the Thacker Pass project to supply most of the lithium resources for its electrification transition. The company has stated that the Department of Energy loan is "a necessary financing component for commercializing this important national resource."

This potential equity investment represents one of the Trump administration's key initiatives to promote US manufacturing reshoring and strengthen domestic supply chains. Recently, the US government has been increasing investments in both domestic and foreign companies to attract more manufacturing capital to the United States. On August 22, the US government reached an agreement with Intel to acquire a 9.9% stake for approximately $8.9 billion, making it one of Intel's largest shareholders.