Graphite One earmarked for US$325M loan for anode manufacturing plant

Graphite One (TSXV: GPH; US-OTC: GPHOF) has been earmarked for a potential US$325-million financing from the Export-Import Bank of the United States (EXIM) to support its production of battery anode materials.

The potential funding will be made through the EXIM’s “Make More in America” and “China and Transformational Exports Program” (CTEP) initiatives, which are designed to strengthen sectors that are critical to U.S. national security and help U.S. exporters facing competition from China, respectively.

The Vancouver-based company is planning to build a vertically integrated, U.S.-based graphite supply anchored by its large Graphite Creek in Alaska, and supplemented by an anode active materials (AAM) manufacturing plant located in Ohio.

The company also intends to make a production decision on Graphite Creek after it completes a feasibility study in next year’s first quarter.

Graphite represents a key battery anode material and one of only four critical minerals highlighted by the U.S. Geological Survey as essential to all six industrial sectors. Despite its importance, the U.S. has no domestic production of graphite and is therefore 100% dependent on imports.

S&P Global estimates that the country imports nearly half of its supply from China, its main rival and the dominant player in the global graphite supply chain, accounting for 77% of the world’s mine production.

Graphite Creek

A 2022 prefeasibility study projected that the mine and a plant in Washington state would produce 75,026 tonnes of advanced graphite products per year over a 26-year life. The project has a post-tax net present value of US$1.4 billion before accounting for tax credits enacted by the U.S. Inflation Reduction Act.

The study assumes that the AAM manufacturing site will initially use purchased synthetic graphite, then incorporating natural graphite material once the Graphite Creek mine enters production.

In March, Graphite One announced it would build the AAM plant in Ohio instead of Washingon. The company has already secured a 50-year lease agreement, including an option to purchase the property once known as Warren Depot, which was part of the National Defense Stockpile infrastructure the last time the U.S. mined graphite.

US backing

In a letter of interest dated Oct. 18, the EXIM states that it is in support of the proposed capital funding plan by Graphite One for the AAM manufacturing facility located in Ohio’s Voltage Valley. The initial capital cost is projected at US$435 million.

“Based on the preliminary information submitted regarding expected U.S. exports and U.S. jobs supported by this project, EXIM may be able to consider potential financing of up to US$325 million of the project’s costs with a repayment tenor of 15 years under EXIM’s ‘Make More in America’ initiative,” the bank stated in its letter.

Construction of the plant is expected to start within three years. While the site’s existing power lines are sufficient for Phase 1 production target of 25,000 tonnes per year of battery-ready anode material, an expansion into the Warren Depot site could accommodate 100,000 tonnes of production annually.

“EXIM’s potential financing, following on G1’s two Department of Defense grants under the Defense Production Act and from the Defense Logistics Agency, underscores the urgent need to bring US graphite supply into production, and end the nation’s 100% foreign dependency,” commented Anthony Huston, CEO of Graphite One.

EXIM has also indicated that the financing may be eligible for for opportunities under the CTEP initiative, given China’s dominance in graphite.

Upon receiving EXIM’s letter, Graphite One intends to submit a formal application next year, after which the EXIM will conduct due diligence before making a final financing commitment.