The suddenly fraught future of the Thacker Pass lithium mine cleared an unexpected hurdle on Tuesday, after the Trump administration agreed to release the first part of a loan critical to the Nevada project’s development in exchange for the U.S. government taking a stake in the effort.

Under the deal with Lithium Americas, the U.S. government will receive a 5 percent stake in the company and a 5 percent stake in the Thacker Pass project itself in exchange for the government releasing the initial $435 million of a $2.23 billion loan that the parties agreed to last year.

It marked an extraordinary end to a weekslong saga over the multibillion dollar loan crucial for Nevada’s efforts to unlock the world’s largest known reserve of lithium, a metal used for electric vehicle batteries. 

The Trump administration has increasingly sought government ownership of private companies in recent months — and while the trend is not without precedent, economic experts fear future market impacts if the government doesn't eventually disentangle itself from these companies. They also acknowledged that these arrangements are more commonly seen in socialist governments.

But what does it exactly mean for the government to partially own a company, and why is it happening in the lithium industry? The Nevada Independent spoke with experts at UNR and UNLV to learn more.

Why would the government want a stake in a lithium company?

The government’s involvement in Lithium Americas likely stems from its desire to be a leading competitor in the global lithium industry, said Fred Steinmann, the director of UNR’s center for economic development.

China has increasingly become a power player in the lithium market, controlling about 65 percent of lithium processing, according to a 2024 report from the Federation of American Scientists. However, the report found it only controls about 18 percent of lithium mining capabilities.

Because of China’s dominance in the industry, it can control lithium prices, Steinmann said. By taking partial ownership of a company poised to be a critical building block of America’s still-growing lithium industry, the government is likely seeking to combat China’s control of the market, he added.

“It does send a clear message to markets, both domestic, international and other foreign powers, that this is an industry of great importance to the national government, and the United States is asserting a leadership role,” Steinmann said.

There are only about 20 significant lithium deposits in the U.S., the largest of which is the site of Lithium Americas’ project.

There is also a national security element. With the world becoming increasingly electric, materials such as lithium are not only crucial for electric vehicles, but also military equipment, Steinmann said.

For this reason, Steinmann said there’s a rationale for the U.S. “to actively and maybe even aggressively” create a robust domestic lithium sector.

What is the precedent?

The Trump administration has recently made a slew of direct investments in private companies, especially in industries that are key vis-à-vis American competition with China.  

In July, the Pentagon took an ownership stake in MP Materials, the Las Vegas-based company that owns the only active rare earth mine in the U.S. just a few dozen miles outside the city. Similarly to lithium, rare earth minerals are critical components for defense technology, electric vehicles, smart phones and many other products.

The Trump administration also recently struck deals to secure a 10 percent stake in Intel and 15 percent of revenue from chip sales to China from Nvidia and AMD.

There’s some precedent for these moves. The government took an ownership stake of about 60 percent of General Motors after its 2009 bankruptcy and bailout, as well as 36 percent of CitiGroup and 80 percent of the American International Group, a finance and insurance corporation that collapsed during the Great Recession.

The government has also taken similar market interference measures during national security crises, such as nationalizing the railroad system during World War I. During World War II, the government also assumed significant operational control over telecommunications and railroad companies.

There is also precedent for the government taking a stake in a specific project — such as its partial ownership of certain coal mining projects during World War II.

However, Bill Robinson, an economics professor at UNLV’s Lee Business School, said the current administration’s recent arrangements with private business differ from past examples, as they do not have an end date in sight.

“We've never had a long-term proposition where we were sharing in the profits of a specific business,” he said. “We had the ownership stake [during the recession], but it was a temporary thing … because those companies were in financial trouble. It's never been done in a way where we're looking at us owning a stake in a private enterprise company for the long term.” 

What are the concerns?

Steinmann added that government interference over a long period of time can contribute to hyperinflation or stagflation — a period characterized by high inflation, slower economic growth and greater unemployment.

“The major concern I have, and I think a lot of economists who believe in competitive capitalistic markets, is if the ownership doesn't end,” Steinmann said. “Once the risk has been mitigated, once the market has been essentially stabilized, you want the federal government out because you want to get back to those market activities.”

Still, Steinmann said he envisioned the arrangement operating similarly to past government ownership deals, and that the government would disinvest once the market stabilizes.

These deals can also put other businesses in the same industry — such as chip-making companies that compete with Intel —  in a difficult position, Robinson said. Competitors now have to wonder if they, too, need to sell a stake to the government, or if they will miss out on government contracts because Intel will get preferential treatment. 

If non-government owned companies make better products, or do so more efficiently, the country may not benefit from those advances as fast as they would under standard market conditions. The Energy Department may also be able to influence Lithium Americas to make decisions it otherwise would not; it will have a representative at Thacker Pass board meetings.

Government ownership of private companies also raises concerns about insider trading, Robinson said. Federal officials could profit off of their knowledge of internal decision-making or push for government deals that would boost the stock price of companies in which they have a personal stake. Asked about how it would address these concerns, an Energy Department spokesperson simply directed The Nevada Independent to its press release on the Lithium Americas deal.

Although Robinson said these kinds of agreements are more commonly seen under socialist governments, Republicans don’t seem worried. For example, Rep. Mark Amodei (R-NV), whose district includes the Thacker Pass mine, said he would be open to the government owning part of Lithium Americas if it meant that the loan would go through.

“Most of the Republicans … they're not saying that this is bad, but it is hard to say it's not socialism,” Robinson said. “This could be a capitalist thing or a socialist thing, depending on how they actually do it.”