Lithium Americas (TSX, NYSE: LAC) says U.S. steel tariffs, inflation linked to the conflict in Iran and shipping disruptions around the Strait of Hormuz could add between $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 numbers came Amidst the first quarter results on Thursday as the company nears completion of detailed engineering work and procurement exceeds 70%. Lithium Americas still expects total Phase 1 spending this year to reach between $1.3 billion and $1.6 billion as construction accelerates toward a late 2027 start-up.
The company noted that the original capital estimate of $2.93 billion for the first phase does not include tariffs, increases in fuel prices or broader inflationary pressures associated with the conflict in the Middle East. Lithium Americas has now released a final capital estimate to incorporate these factors along with updated business and procurement assumptions.
Lithium Americas said more than 75% of the project’s structural steel, which is sourced from the United Arab Emirates, is either in transit or already on site after shipments were redirected through the Saudi port of Jeddah to avoid regional disruptions. Key long-lead equipment including transformers, reactors and steam turbine components is also arriving.
The building is at full capacity
Despite the high cost risks, Lithium Americas said construction continues to accelerate toward mechanical completion in late 2027. There are currently more than 1,300 workers on site, and peak construction is expected to exceed 2,000 workers.
As of March 31, Lithium Americas had capitalized $1.3 billion in construction and project-related costs, including $1.1 billion directly related to the estimated total capital expenditures for the mine.
“At a time when resilient domestic supply chains are more important than ever, lithium is emerging as a strategic resource that supports national security and a reliable energy future,” CEO Jonathan Evans said in the statement.
Strategic project
The rising costs underscore the challenge facing Western governments and mining companies trying to build domestic supply chains for metal batteries, while geopolitical tensions reshape global trade routes. Once completed, Thacker Pass is expected to produce 40,000 tons of lithium carbonate per year, enough for about 800,000 electric cars and well above the output of Albemarle’s (NYSE: ALB) Silver Peak mine, the only currently operating brine lithium mine in the United States.
The project has received strategic support from General Motors (NYSE: GM), Orion Resource Partners and the US government, which Last year separate stakes took 5% In both Lithium Americas and the Thacker Pass project itself. Lithium Americas ended the quarter with approximately $1.2 billion in cash and restricted cash, including $529 million across the Thacker Pass joint venture, after receiving another $432 million advance from the Department of Energy loan facility.
Evans said lithium market conditions are improving ahead of the project’s expected start-up in late 2027 and ramp-up into 2028.
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