The United States government’s Department of Energy (DoE) has loaned $1.2 billion to Aussie synthetic graphite tech junior Novonix (ASX: NOV) for its 31,500 tonne per annum (tpa) manufacturing plant in Tennessee.
A key element in lithium-ion battery production, graphite is largely sourced from China, which rolled out a monopoly-level 77% of the material last year, according to the U.S. Geological Survey.
It’s no secret that the West has recently been scrambling for ex-China supplies of the material after the Middle Kingdom tightened graphite exports back in October last year – along with other banned critical minerals such as gallium and germanium.
Earlier this month China again tightened the screws on graphite supply, flat-out banning exports to America, the largest consumer of products containing the critical mineral.
The geopolitical ructions have analysts pegging graphite to be at the start of a bull run as these converging forces have refocused interest in shoring up supply lines of the metal.
Advantage Novonix
It’s a boon for Novonix, which has proprietary IP that can produce synthetic graphite to use in batteries, semiconductors and other advanced tech.
The conditional $1.2 billion commitment by the U.S. government will partially fund Novonix’ plant development which is expected to reach full production capacity of battery-grade graphite by the end of 2028 and create 450 full-time jobs.
Novonix has binding offtake agreements to supply synthetic graphite to Panasonic, carmaker Stellantis and Volkswagen’s PowerCo.
The company’s Riverside facility is scheduled to start commercial production in 2025, ramp up to 31,500tpa by 2028 and with the extra funding, could see Novonix end up expanding up to a whopping 75,000tpa.