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DOE offers conditional commitment for $107M loan to Syrah graphite-based anode material project

The Department of Energy’s (DOE’s) Loan Programs Office (LPO) has offered a conditional commitment for a US$107-million loan to Syrah Technologies to fund the expansion of its Vidalia graphite-based active anode material (AAM) facility in Louisiana to 11.25 ktpa AAM production capacity. (Earlier post.)

With this newly expanded production capacity, the Syrah Vidalia Facility is expected to produce enough natural active anode material (AAM) for approximately 2.5 million EVs by 2040.

If finalized, this would be the first loan from LPO’s Advanced Technology Vehicles Manufacturing (ATVM) program since 2011 and the first from the ATVM loan program to a materials-processing facility. Other recipients of funding from the ATVM loan program include Ford, Nissan and Tesla.

A binding loan agreement from DOE is subject to the satisfactory completion of due diligence by DOE, satisfaction of conditions precedent specified in the term sheet, approval of the Syrah Board, receipt of all material governmental and third-party consents necessary for the loan and the negotiation and execution of binding loan documents.

Once binding loan documents have been signed, Syrah will need to satisfy certain conditions precedent before the loan commitment from DOE becomes effective and funds can be advanced. The company and DOE are targeting financial close of the loan by the end of June 2022 and first advance of the loan in the September 2022 quarter.

Proceeds from Syrah’s fully underwritten institutional placement and pro rata accelerated non-renounceable entitlement offer completed earlier this year are sufficient to fund fully the remaining US$165 million of estimated installed capital costs of the Vidalia Initial Expansion project.

To the extent the DOE loan is drawn, Syrah will use surplus proceeds from the equity raising to accelerate studies and detailed engineering of a potential larger expansion of Vidalia, fund construction of such a potential expanded AAM facility at Vidalia, to provide additional balance sheet flexibility to Syrah and/or for capital management initiatives.

This announcement builds on a recent authorization by President Biden to use the Defense Production Act to secure sustainable and reliable domestic sources of critical materials for large-capacity batteries, including graphite. (Earlier post.)

Lithium-ion batteries currently require more graphite than any other battery material by mass, including lithium. However, today the United States is 100% reliant on imported graphite as China produces nearly all of the high-purity graphite needed to make lithium-ion batteries.

Natural graphite for the Syrah Vidalia Facility will come from the mining and processing operation in Balama, Mozambique, which is also owned and controlled by Syrah Technologies’ parent-owner, making the Syrah Vidalia Facility the only vertically integrated, large-scale AAM producer outside of China, and the first such supplier in the United States.

Syrah will transport the natural graphite concentrate (-100 mesh fines material) from Balama Graphite Operation to Vidalia. There the natural graphite is shaped into a spherical shape and purified to produce an anode precursor material. The precursor material is then coated and heat treated to produce a finished AAM.

Syrah has executed a four-year offtake agreement with Tesla to sell the majority of AAM produced from the Syrah Vidalia Facility. (Earlier post.) The remaining capacity is expected to be sold to other auto and EV battery manufacturers.


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