Lithium Americas (TSX,NYSE: LAC) says US tariffs on steel, inflation linked to the conflict in Iran and shipping disruptions around the Strait of Hormuz could add $80 million to $120 million to construction costs at its Thacker Pass lithium project in Nevada, with most of the impact expected this year.
The figures came amid its first-quarter results on Thursday as the company nears detailed engineering completion and procurement surpasses 70%. Lithium Americas still expects Phase 1 spending this year to total between $1.3 billion and $1.6 billion as construction accelerates toward a late-2027 startup.
The company flagged that the original $2.93-billion capital estimate for Phase 1 did not include tariffs, fuel-price increases or broader inflationary pressures tied to the Middle East conflict. Lithium Americas has now launched a definitive capital estimate to incorporate those factors along with updated labour and procurement assumptions.
Lithium Americas said more than 75% of structural steel for the project, sourced from the United Arab Emirates, is either in transit or already at site after shipments were rerouted through Saudi Arabia’s Port of Jeddah to avoid regional disruptions. Major long-lead equipment including transformers, reactors and steam turbine components is also arriving.
Construction at full tilt
Despite the higher-cost risks, Lithium Americas said construction continues to accelerate toward mechanical completion in late 2027. More than 1,300 workers are currently on site, with peak construction expected to exceed 2,000.
As of March 31, Lithium Americas had capitalized $1.3 billion in construction and project-related costs, including $1.1 billion tied directly to the mine’s total estimated capex.
“At a moment when resilient domestic supply chains are more critical than ever, lithium stands out as a strategic resource underpinning both national security and a reliable energy future,” CEO Jonathan Evans said in the release.
Strategic project
The escalating costs underscore the challenge facing Western governments and miners trying to build domestic battery-metal supply chains while geopolitical tensions reshape global trade routes. Once complete, Thacker Pass is expected to produce 40,000 tonnes of lithium carbonate annually, enough for roughly 800,000 electric vehicles and well above output from Albemarle’s (NYSE: ALB) Silver Peak mine, currently the only operating lithium brine mine in the US.
The project has drawn strategic backing from General Motors (NYSE: GM), Orion Resource Partners and the US government, which last year took separate 5% stakes in both Lithium Americas and the Thacker Pass project itself. Lithium Americas ended the quarter with about $1.2 billion in cash and restricted cash, including $529 million at the Thacker Pass joint venture level, after receiving another $432-million advance from a Department of Energy loan facility.
Evans said lithium market conditions are improving ahead of the project’s expected startup in late 2027 and ramp-up through 2028.
Comments