Department of Energy conditionally commits to a US$107M loan for battery-grade graphite anode facility in Louisiana Metal Tech News – April 20, 2022
To support American production of graphite active anode material, the single largest ingredient in most lithium-ion batteries powering electric vehicles, the U.S. Department of Energy's Loan Programs Office has allotted $107 million to fund the expansion of Syrah Resources Ltd.'s Vidalia graphite processing facility in Louisiana.
With this and further expansions to follow, Vidalia is expected to produce enough natural graphite-based active anode material, also known as coated spherical graphite, for roughly 2.5 million EVs by 2040.
"Projects like Syrah Vidalia are critical to our national security, our foreign policy, building our supply chain, and our economy," said DOE Loan Programs Office Director Jigar Shah.
The anodes in lithium-ion batteries that power most EVs are packed full of graphite that has been rolled into potato-shaped spheres and coated in a hard carbon shell that is thermally treated. The spherical shape allows the graphite to be more efficiently packed into battery cells, while the coating extends the graphite's lifetime capacity.
During 2021, China supplied approximately 82% of the world's mined graphite and produced nearly all of the coated spherical graphite being used by global auto and battery makers.
Syrah's Vidalia plant, however, is positioned to provide an alternative source for this active anode material.
The facility already has the capacity to upgrade concentrates from Syrah's Balama mine in Mozambique to 5,000 metric tons of unpurified spherical graphite per year. With a furnace installed last year, this facility is able to upgrade 200 metric tons of this spherical graphite to active anode material annually.
This demonstration-scale plant is providing auto and battery manufacturers with a sample of the product to be commercially produced. This includes Tesla, which has agreed to buy 8,000 metric tons of active anode material from Vidalia for an initial four years to get started.
A 2020 feasibility study estimated that it will cost $138 million for this expansion of Vidalia, which will allow the Louisiana plant to produce 10,000 metric tons of active anode material per year. These costs, however, have climbed over the past couple of years.
Syrah, which has already invested $79 million into Vidalia, is already planning another expansion to around 45,000 metric tons per year by 2025. Even with this expansion, Vidalia would only account for around 12% of the graphite anode material that is expected to be needed in the U.S. at that time.
In support of Vidalia's expansion, the DOE Loan Programs Office has conditionally committed to lend up to $107 million to Syrah on a ten-year term. This interest on this loan will be fixed at the long-dated U.S. Treasury rates at the time of the closing of the loan, which is currently expected in June.
"While this conditional commitment demonstrates the Department's intent to finance the project, several steps remain, and certain conditions must be satisfied before the Department issues a final loan," Shah cautioned.
If finalized, this would be the first loan from LPO's Advanced Technology Vehicles Manufacturing program in more than a decade, and the first ever to support the supply chain upstream from automakers such as previous ATVM loan recipients Ford, Nissan, and Tesla.
"The Conditional Commitment offered to Syrah would be for the first ever ATVM loan to support a supply chain manufacturing project and further demonstrates DOE's commitment to building a strong domestic supply chain for zero emission transportation solutions," the DOE Loan Programs Office director said. "This reiterates President Biden's commitment to strengthening US critical mineral supply chains and growing the US workforce to support domestic battery manufacturing for EVs. Moreover, the Vidalia Initial Expansion project provides a socially and environmentally responsible US supply chain for graphite, which is critical to accelerating the deployment of batteries to power EVs."
For Syrah, this loan and investor funding will provide the approximately $165 million needed to finish the initial Vidalia expansion.
"The finalisation of a term sheet and offer of a Conditional Commitment from DOE for a loan under the ATVM program highlights Vidalia's strategic position in the USA and provides strong validation of Syrah, Vidalia and the Vidalia Initial Expansion," said Syrah Managing Director and CEO Shaun Verner. "Importantly, the loan will allow Syrah to accelerate its growth strategy in its downstream business and support the rapidly growing EV and battery supply chain in the USA."