Lithium Americas: Federal Ruling On Nevada Moly Project Brings Uncertainty To Thacker Pass Project

A March 31, 2023 U.S. District Court of Nevada ruling in a case involving a planned molybdenum mine in that state introduces some degree of uncertainty for Lithium Americas Corp.’s (TSX: LAC) plan to build the giant Thacker Pass lithium mine in northern Nevada. Judge Larry Hicks’ decision comes about two months after the early February 2023 ruling by another U.S. federal court that seemed to remove most concerns about whether the Thacker Pass Project could finally go forward.

More specifically, Judge Hicks vacated the U.S. Bureau of Land Management’s (BLM) previous approval of the private company Eureka Moly’s planned molybdenum mine in central Nevada. Molybdenum is a metal used in the production of structural and stainless steel. The judge’s decision rested on a 2022 U.S. Ninth Circuit Court of Appeals decision regarding Hudbay Minerals’ proposed open pit Rosemont copper project in Arizona.

The Court of Appeals ruled that the U.S. Forest Service incorrectly assumed that Hudbay had valid mining claims to occupy about 2,800 acres of public land. Most of those acres would be used for waste rock facilities. Believe it or not, the 1872 Mining Law (passed in that year and signed into law by President Ulysses S. Grant) was a governing principle in the court’s decision.

As currently interpreted, this mining law gives mining companies substantial leeway to develop mining projects on large tracts of public land, but the Court of Appeals felt the Forest Service went too far in allowing Hudbay to use 2,447 acres of the 2,800 acres to dispose of waste rock. Using so much of the land for permanent waste rock storage, the Court of Appeals reasoned, could not be justified according to the 1872 Mining Law.

In his decision to deny approval to Eureka Moly’s molybdenum project, Judge Hicks found “no meaningful difference” between its situation and the Court of Appeals arguments in the Rosemont copper project.

With regard to Thacker Pass, Chief Judge Miranda Du of the U.S. District Court of the District of Nevada likewise cited the Court of Appeals’ reasoning in the Rosemont copper case in her early February decision to affirm the BLM’s decision to license the giant lithium project, which in turn allowed Lithium Americas to begin construction. In taking a less drastic action than Judge Hicks, Judge Du required the BLM to “determine whether [Lithium Americas] possesses valid rights to the waste dump and mine tailings it intends to use for the Project.”

Environmental groups have appealed Judge Du’s decision to the Ninth Circuit Court of Appeals, the same court that issued the fairly strict interpretation of the mining law cited in Judge Hicks’ and Judge Du’s rulings. Oral hearings on the appeal are scheduled to be held in June 2023. It is of course unclear how the Ninth Circuit will rule on the appeal, but Judge Hicks’ decision on the Eureka Moly matter has introduced a higher degree of uncertainty into the proceedings.

Lithium Americas Corp. last traded at $26.97 on the TSX Exchange.

Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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