Syrah Resources has been offered a loan of up to $107m from the US Department of Energy (DOE) for funding the initial expansion of its Vidalia active anode material (AAM) facility in Louisiana.

A non-binding term sheet has been finalised by the company’s fully-owned subsidiary Syrah Technologies with the DOE.

The expansion will ramp up the facility’s capacity to 11,250 tonnes per annum of active anode material, said the Australia-based graphite miner.

In February 2022, Syrah Resources announced an investment of $176m to expand the graphite processing facility located in Vidalia. The facility processes graphite for lithium-ion batteries used by Tesla and other manufacturers in their electric vehicles (EVs).

The proposed loan will be available under DOE’s Advanced Technology Vehicles Manufacturing (ATVM) loan programme in support of the US government’s critical minerals strategy.

According to Syrah Resources, the loan is conditional on the meeting of certain conditions such as fulfilling remaining legal, contractual, and financial requirements.

Under the term sheet, the loan has a term of up to nearly 10 years from financial close.

DOE loans programmes office director Jigar Shah said: “The Conditional Commitment offered to Syrah would be for the first ever ATVM loan to support a supply chain manufacturing project and further demonstrates DOE’s commitment to building a strong domestic supply chain for zero emission transportation solutions.

“This reiterates President Biden’s commitment to strengthening US critical mineral supply chains and growing the US workforce to support domestic battery manufacturing for EVs.”

Syrah Resources plans to add 180,000ft2 of building and processing space to its existing Vidalia facility that is spread over 50,000ft2.

The additional space will accommodate equipment and systems required for processing natural graphite into AAM, which, in turn, is used in lithium-ion batteries.

Production of AAM from the expanded facility is expected to begin in Q3 2023.

Syrah Resources managing director and CEO Shaun Verner said: “The finalisation of a term sheet and offer of a Conditional Commitment from DOE for a loan under the ATVM program highlights Vidalia’s strategic position in the USA and provides strong validation of Syrah, Vidalia and the Vidalia Initial Expansion.

“Importantly, the loan will allow Syrah to accelerate its growth strategy in its downstream business and support the rapidly growing EV and battery supply chain in the USA.”