The Rise of a U.S. Domestic Graphite Supply Chain: A Strategic Opportunity in the EV Transition Era

The global electric vehicle (EV) revolution is accelerating, but its success hinges on a critical question: Can the United States build a self-sufficient supply chain for battery materials? Enter Graphite One Inc. (TSX-V: GPH; OTCQX: GPHOF), a company poised to redefine the answer. With a vertically integrated project spanning Alaska's Graphite Creek mine and Ohio's advanced processing facilities, Graphite One is not just a player in the EV transition—it is a linchpin in the U.S. effort to secure critical mineral independence.

A National Imperative: Graphite as the EV Battery's Backbone

Lithium-ion batteries, the lifeblood of EVs, require anode active material (AAM), a product derived primarily from natural graphite. For decades, the U.S. has imported nearly 100% of its AAM from China, creating a vulnerability in both energy security and national defense. Graphite One's 2025 Feasibility Study (FS) for its U.S.-based supply chain project—completed 15 months ahead of schedule—marks a turning point. By 2031, the company aims to produce 169,000 tonnes of AAM annually, sourced entirely from its Graphite Creek mine in Alaska. This scale of production would make the U.S. a self-sufficient AAM producer for the first time in decades.

The project's economic strength is staggering. With a pre-tax IRR of 30% and a net present value (NPV) of $6.4 billion, the venture is not just strategic—it's financially robust. Even more compelling is the post-tax IRR of 27% and NPV of $5.0 billion, bolstered by the Inflation Reduction Act's (IRA) 45X Advanced Manufacturing Tax Credits. These incentives reduce production costs by up to 30%, creating a tailwind for profitability.

Government Support: A Catalyst for Rapid Development

Graphite One's success is inextricably tied to the 2025 energy policies under President Donald Trump's administration. Executive Orders like Unleashing American Energy and Unleashing Alaska's Extraordinary Resource Potential have streamlined permitting for critical mineral projects, slashing timelines for projects like Graphite Creek. The mine's inclusion in the FAST-41 Federal Permitting Dashboard—a tool designed to accelerate infrastructure development—further underscores its strategic importance.

The company has also secured $37.5 million in DPA Title III funding from the Department of Defense and a $325 million Letter of Interest from the Export-Import Bank of the U.S. (EXIM). These funds are not just financial support—they signal a national consensus that Graphite One's project is vital to energy security.

Strategic Partnerships: Building a Closed-Loop Supply Chain

Graphite One's collaboration with Lucid Group, a leading EV manufacturer, is a masterstroke. The two companies have inked supply chain offtake agreements, ensuring a stable market for Graphite One's AAM and natural graphite. This partnership is part of the broader MINAC (Minerals for National Automotive Competitiveness) initiative, a coalition of U.S. mineral and automotive producers aimed at reducing reliance on foreign suppliers.

The company's modular approach to the Ohio Secondary Treatment Plant (STP) adds another layer of resilience. By constructing the facility in seven 25,000-tonne-per-year modules, Graphite One aligns capital deployment with market demand, minimizing financial risk. The first module, expected to produce 48,000 tonnes of AAM by 2028, will use purchased graphite until the mine comes online. By 2031, the STP will operate at full capacity, producing 256,500 tonnes of graphite and carbon products annually, including AAM, purified graphite, and industrial-grade materials.

A Circular Economy Strategy for Long-Term Resilience

Beyond mining and processing, Graphite One is pioneering a circular economy model. A co-located recycling facility in Ohio will reclaim graphite and other battery materials, reducing the need for virgin resource extraction. This approach not only aligns with the IRA's sustainability mandates but also future-proofs the supply chain against resource scarcity.

The company's Feasibility Study estimates a 20-year mine life for Graphite Creek, with reserves tripling from 2022 projections. Given that the mine has explored only 12% of the 15.3 km mineralized zone, there is significant potential for further expansion. This scalability is critical as the EV market grows—global AAM demand is projected to reach 3 million tonnes by 2030, up from 250,000 tonnes in 2023.

Risk Mitigation: A Prudent Development Plan

Graphite One's phased approach to capital expenditure is a key differentiator. The first module of the STP costs $607 million, with subsequent modules at $552 million each. This modular strategy ensures flexibility, allowing the company to adjust to market conditions without overextending capital. Additionally, the mine's conventional open-pit methods and existing infrastructure in Alaska (e.g., port access in Nome) reduce operational risks.

Environmental and regulatory hurdles remain, but the company's alignment with executive orders and inclusion in the FAST-41 program position it to navigate these challenges efficiently. The mine's 3.2:1 strip ratio and advanced water treatment systems further demonstrate a commitment to sustainability.

Investment Implications: A High-Conviction Play

For investors, Graphite One represents a rare confluence of strategic necessity, financial strength, and policy tailwinds. The company's alignment with the U.S. critical mineral strategy—backed by $37.5 million in DPA funding and a $325 million EXIM Letter of Interest—ensures it will remain a priority in the government's energy transition agenda.

The stock's performance over the past three years () reflects growing confidence in its prospects. With a market cap of approximately $1.2 billion and a forward-looking P/E ratio of 12, the stock is undervalued relative to its projected growth. Analysts project a 500% increase in revenue by 2031, driven by AAM sales and recycling revenue.

Conclusion: A National Champion in the EV Era

Graphite One is not just building a mine—it is constructing the backbone of U.S. energy independence. By securing domestic sources of AAM, leveraging government support, and pioneering a circular economy model, the company is addressing the most critical vulnerability in the EV supply chain. For investors seeking exposure to the energy transition, Graphite One offers a high-conviction, long-term opportunity.

As the U.S. races to outpace China in battery material production, Graphite One's role in this narrative is irreplaceable. The question is no longer if the company will succeed—but how much it will grow.