NOVONIX's US$754M Loan: A Game Changer for Synthetic Graphite Production

NOVONIX, a leading battery materials and technology company, has been offered a conditional commitment for a US$754 million loan from the U.S. Department of Energy (DOE) to finance a new synthetic graphite manufacturing plant in Chattanooga, Tennessee. This significant development is set to revolutionize the synthetic graphite supply chain in North America and support the path towards U.S. energy independence. Let's delve into the details of this loan and its implications for NOVONIX and the broader energy landscape.

The loan, offered under the DOE's Advanced Technology Vehicles Manufacturing (ATVM) Loan Program, will partially finance the construction of the new facility, which is expected to produce approximately 31,500 tonnes per annum (tpa) of synthetic graphite. This production capacity can support the production of lithium-ion batteries for approximately 325,000 electric vehicles (EVs) each year. The new facility is expected to reach full production capacity by the end of 2028, creating 450 full-time operational jobs and 500 construction jobs.



The loan is structured in two primary tranches, with terms of 15 years and 10 years, respectively. The first tranche will support the site and infrastructure for the New Facility and 21,000 tpa of production capacity, while the second tranche will support an additional 10,500 tpa of production capacity. This structure allows for a phased completion of infrastructure and production lines, aligning with NOVONIX's expansion plans and optimizing cash flow.

NOVONIX's CEO, Dr. Chris Burns, emphasized the importance of domestic production of high-performance, battery-grade synthetic graphite, highlighting the recent announcements from China to further scrutinize the export of battery-grade graphite to the United States. The conditional commitment from the government underscores the focus on localizing critical materials in the battery supply chain, such as graphite.

NOVONIX has signed binding offtake agreements to supply synthetic graphite to Panasonic Energy, Stellantis, and PowerCo, strengthening its leadership in onshoring the synthetic graphite supply chain in North America. The company plans to subsequently expand the production capacity of the new facility to its target of 75,000 tpa of synthetic graphite production, dependent on customer demand and access to additional financing.

The loan's repayment schedule aligns with NOVONIX's projected revenue growth and cash generation, as the company expects to reach full production capacity by the end of 2028. The loan will be guaranteed by the Company and secured by a first priority security interest in all assets of the Borrower, equity interests in and, with certain exceptions, assets of certain of NOVONIX's existing subsidiaries.

In conclusion, the conditional commitment of a US$754 million loan from the DOE to NOVONIX is a significant step towards the company's expansion plans and meets its target production of 150,000 tpa in North America. The loan's structure, with two primary tranches, supports the phased completion of infrastructure and production lines, optimizing cash flow and aligning with the company's growth strategy. This development is a testament to the U.S. government's commitment to supporting the domestic battery supply chain and accelerating the transition to clean energy.