Department of Energy to loan $2 billion to create battery material recycling plant
The U.S. Energy Department announced that will make a conditional $2-billion low-cost government loan to Redwood Materials to help the company build out a $3.5 billion recycling and remanufacturing complex in Nevada for battery materials.
The Department of Energy has made a number of large loans in recent months including a $2.5 billion loan to Ultium Cells, a joint venture between General Motors Co and LG Energy Solution that was announced in July 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.
Reuters reported that 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, Ford Motor and Nissan Motor, which included some cell manufacturing.
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 percent of batteries for electric vehicles.
Redwood Materials was founded in 2017 by former Tesla executive Straubel. The company aims to become one of the world’s largest recyclers and remanufacturers of battery materials, including copper, lithium, cobalt and nickel.
Redwood Materials said it will supply copper foil from Nevada to Panasonic 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 and Volkswagen Group.