Syrah Resources secures US$107 million loan for electric vehicle battery factory in Louisiana

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April 18 (Reuters) – The U.S. Department of Energy is lending $107 million to graphite miner Syrah Resources (SYR.AX) to expand an electric vehicle battery parts plant in Louisiana, the first loan in more than 10 years of a special funding program from the department.

Shares of Syrah, which are traded in Australia, rose more than 14% on Tuesday following the news.

President Joe Biden has set ambitious goals for half of all vehicles sold in the United States to be electric by 2030, a goal that will require more national treatment of the building blocks of electric vehicles.

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While the special funding program, known as the Advanced Technology Vehicle Manufacturing (ATVM) Loan Program, has lent to automakers Ford Motor Co (FN) and Tesla Inc (TSLA.O) in the past , the Syrah loan would be the first step directly to a car manufacturer.

“The United States is seriously considering offshoring battery manufacturing and critical materials supply chains,” Jigar Shah, head of the Energy Department’s loan programs office, told Reuters. He estimated that the United States only has about 5% of the manufacturing capacity needed to meet Biden’s 2030 goal.

The loan is conditional pending the final papers. Syrah said it expects the loan to close by June and the funds to be distributed by September. US Energy Secretary Jennifer Granholm approved the conditional loan offer.

Lithium Americas Corp (LAC.TO), ioneer Ltd (INR.AX), Lordstown Motors Corp (RIDE.O) and Piedmont Lithium Inc (PLL.O) also said they applied for ATVM loans.

Australia-based Syrah plans to use the loan to help fund the expansion of a Louisiana plant that will turn graphite mined in Mozambique into anodes, the positively charged electrode of a battery. The facility is expected to produce enough anodes to build 2.3 million electric vehicles by 2040.

Syrah, which has a deal to supply anodes to Tesla starting in 2024, completed a stock offering in February to help further fund the $176 million project.

Importantly for Shah’s office, Syrah said its mine follows sustainable mining practices and most mine employees are Mozambican, with independent auditors verifying the claims. The Louisiana plant is expected to create about 150 construction jobs and 98 full-time jobs.

“The loan will allow Syrah to … support the rapidly growing electric vehicle and battery supply chain in the United States,” said Shaun Verner, chief executive of Syrah.

By congressional mandate, the ATVM program is not authorized to fund the construction of new mines, but it can fund processing facilities. Shah’s office is reviewing more than $2 billion in other critical mining loan applications.

Shah said Syrah’s loan was processed in about five months because the company responded quickly to requests for information, although he said other loan requests would take longer.

“The vast majority of applicants are not ready,” Shah said. “We need answers to all our questions to be able to process a loan.”

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Reporting by Ernest Scheyder; Editing by Barbara Lewis and Muralikumar Anantharaman

Our standards: The Thomson Reuters Trust Principles.

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