By Paul Lienert and David Shepardson
(Reuters) -The U.S. Energy Department on Thursday made a conditional commitment to Redwood (NYSE:RWT) Materials for a $2 billion low-cost government loan to help build out a $3.5 billion recycling and remanufacturing complex in Nevada for battery materials.
Energy Secretary Jennifer Granholm said that, if finalized, the loan will help the project create critical materials for electric vehicle batteries.
"It's going to be a slam dunk for our domestic burgeoning electric vehicle industry," Granholm said, adding that Redwood will play an "outsized role in bringing the battery supply chain home -- because you are focused on the pieces that we don't have in the United States."
Redwood Materials expects to draw down the first loan tranche later this year, Chief Executive JB Straubel said in an interview.
The initial loan draw "will help accelerate (production) and compress the time for us to get to full scale” at the northern Nevada complex, which has started to produce copper foil for battery anodes, Straubel said.
Straubel said there has been "a frenzy of activity" among electric vehicle and battery manufacturers since President Joe Biden signed the Inflation Reduction Act (IRA) in August. The IRA rules are designed to shift the U.S. battery supply chain away from China, which currently produces 70% of batteries for electric vehicles.
Last July, the Energy Department said it would loan $2.5 billion to Ultium Cells, a joint venture between General Motors (NYSE:GM) Co and LG Energy Solution, to help finance construction of new U.S. battery cell manufacturing facilities.
Last month, the department said it planned to loan Ioneer Ltd up to $700 million to build its Rhyolite Ridge lithium mining project in Nevada.
The loans are coming from the Advanced Technology Vehicles Manufacturing (ATVM) loan program. More than 10 years ago, the ATVM program provided low-cost government loans to Tesla (NASDAQ:TSLA), Ford Motor and Nissan (OTC:NSANY) Motor, which included some cell manufacturing.
EXPANSION PLANS
Redwood Materials, founded in 2017 by former Tesla executive Straubel, is on a path to become one of the world’s largest recyclers and remanufacturers of battery materials, including copper, lithium, cobalt and nickel.
In addition to the Nevada site near Reno, Redwood Materials in December said it planned to construct a similar facility northwest of Charleston, South Carolina, also at a cost of around $3.5 billion.
Each facility will have an initial planned capacity to process 100 gigawatt-hours of electrode materials, enough to supply more than 1 million EVs each. The South Carolina complex eventually could be expanded to "several hundred gigawatt-hours," Straubel said.
Straubel said the South Carolina project is running about two years behind the Nevada facility.
Redwood Materials said it will supply copper foil from Nevada to Panasonic (OTC:PCRFY) for battery cells produced at the Nevada Gigafactory that Panasonic jointly operates with Tesla. It will also supply cathode material to Panasonic’s new Kansas battery plant, which is slated to open in 2025.
Redwood Materials has supply agreements with a number of manufacturers, including Ford, Toyota Motor (NYSE:TM) and Volkswagen (ETR:VOWG_p) Group.