Piedmont Lithium has withdrawn its application for a debt package from a U.S. government loan program and is scaling back its ambitious expansion plans across two continents. This decision comes as lithium prices have plummeted by 83% over the past year, largely due to overproduction in China and sluggish electric vehicle (EV) sales, which have led to industry layoffs and investor apprehension.
Once a favorite among Wall Street and retail investors, especially due to supply agreements with Tesla and LG Chem, Piedmont canceled its application with the U.S. Department of Energy’s Loan Programs Office (LPO) primarily due to the costs associated with the application process. This move follows the cancellation of a Tennessee lithium project that had previously received a $141.7 million government grant, raising questions about how the company will finance its flagship North Carolina project, which is projected to exceed $1 billion in costs.
Piedmont had initially aimed to secure debt financing covering 65% to 75% of its North Carolina project’s costs, similar to conditional loans extended to other lithium companies. However, the loan application process requires significant upfront costs for technical experts and typically involves financing being released in tranches after expenses are incurred, adding financial strain.
CEO Keith Phillips stated that the company does not feel an urgent need to pursue the LPO application given current market conditions and changes to its North Carolina plans. He indicated that Piedmont would maintain financial discipline and manage cash effectively, which would inevitably delay development timelines. Phillips expressed hope to submit a new application in the future when conditions are more favorable.
At the end of June, Piedmont reported having $59 million in cash and recently laid off nearly a third of its workforce. Since last October, the company has spent approximately $1.9 million on costs related to the DOE loan application and other expenses.