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UPDATE 2-U.S. to list Nevada flower as endangered, dealing blow to lithium mine

(Adds ioneer closing stock price, trade group comment)

June 3 (Reuters) - The U.S. Fish and Wildlife Service said on Thursday it will propose listing the Tiehm’s buckwheat flower as an endangered species, dealing a blow to ioneer Ltd’s proposed Rhyolite Ridge lithium mine in Nevada.

The decision reflects the ongoing tension between environmentalists and industry as the United States tries to wean its economy off fossil fuels and go electric. Lithium is a key component of electric vehicle (EV) batteries.

The endangered species designation does not immediately block the project, but could impede permitting and financing efforts. Construction had been slated to start this year, with the mine opening by 2023.

Reuters reported last week that U.S. President Joe Biden plans to look abroad for most supplies of EV metals, part of a strategy designed to placate environmentalists.

“The impact to Tiehm’s buckwheat from mining, salvage operations, or both would be permanent and irreversible under the proposed project,” the Fish and Wildlife Service said on Thursday.

The proposal is now open to public comment and could be finalized by the end of the year.

Shares of ioneer traded in the United States fell more than 10% on Thursday.

A cluster of Tiehm’s buckwheat - which are found nowhere else on earth - were destroyed last summer by squirrels gnawing roots for water in the arid Nevada desert. That incident, along with the mine’s development, would reduce the flower’s population by at least 70% and as much as 88%, the agency found.

The company’s plan to transplant the flowers to a new location likely would fail because Tiehm’s buckwheat thrives in the soil atop the lithium deposit, the agency said.

Australia-based ioneer disagreed, saying it believes the flowers can be transplanted to different soil types. The company also said it doubts the flowers would survive climate change in the Nevada desert without its help and does not feel the agency’s decision is a major obstacle.

“We are prepared to do whatever is necessary to make this mine coexist with Tiehm’s buckwheat,” said James Calaway, ioneer’s executive chairman.

The Center For Biological Diversity (CBD), an environmental group opposed to the mine, said the United States should make preserving biodiversity a priority.

“The Biden administration is at a crossroads and the Tiehm’s buckwheat is a symbol of our times,” said CBD’s Patrick Donnelly.

The Zero Emission Transportation Association (ZETA), a trade group of 28 automakers and their suppliers, including Tesla Inc and ioneer, said the agency’s designation means there likely will be “twists and turns” in Biden’s attempt to boost the U.S. EV sector.

“As we march toward a net zero economy, we need to figure out how to secure a domestic supply chain for lithium,” said Joe Britton, ZETA’s executive director. (Reporting by Ernest Scheyder; Editing by Aurora Ellis)

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