US Department of Energy set to lend $2.5 billion to GM battery joint venture

WASHINGTON, July 25 (Reuters) – The U.S. Department of Energy on Monday announced plans to lend $2.5 billion to a joint venture of General Motors Co (GM.N) and LG Energy Solution (373220.KS) to help finance the construction of new lithium power plants. ion battery cell manufacturing facilities.

The conditional commitment for the loan to Ultium Cells LLC for facilities in Ohio, Tennessee and Michigan is expected to close in the coming months and comes from the government’s Advanced Technology Vehicle Manufacturing (ATVM) loan program ), which has not financed a new loan since 2010.

The plan, first reported by Reuters, would mark the Department of Energy’s first loan exclusively for a battery cell manufacturing project under the vehicle program.

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The program previously offered low-cost government loans to Tesla Inc (TSLA.O), Ford Motor (FN) and Nissan (7201.T), which included some cell manufacturing.

President Joe Biden has set a goal that 50% of US auto production by 2030 will be electric or plug-in hybrid electric vehicles.

“We need to have vehicle manufacturing capability, but also battery manufacturing capability,” Jigar Shah, who heads the energy department’s loan program office, told Reuters in an interview. “This project provides one of the newest additions to the scale of battery manufacturing in this country.”

Ultium said in a statement that “the facilities will create more than 5,000 new high-tech jobs in the United States. We are grateful for this consideration and look forward to working with the Department of Energy on future steps”.

In total, GM and LG are investing more than $7 billion through the company to build three battery factories. Production at its Ohio battery plant is expected to begin in August, an Ultium spokeswoman said. The Warren, Ohio plant currently has 700 workers.

Production is expected to begin at its Tennessee plant in late 2023 and in Michigan in 2024.

“The goal is to help these companies go faster and further than they otherwise would have,” Shah said. The loan agreement requires Ultium to provide employees with local salary and benefits.

In April, the Department of Energy announced that it had issued a conditional commitment for a $107 million loan to graphite miner Syrah Resources (SYR.AX) to expand an electric vehicle battery parts plant in Louisiana.

Shah said the department has received more than $18 billion in loan applications from the auto program and expects at least another $5 billion in actively prepared applications.

“I think there will be more loans granted,” Shah said, declining to offer a specific timeline.

The program currently has $17.7 billion in loan authorization. Shah said “for motivated borrowers, they can close these loans quite quickly.”

Australian company Syrah plans to use the loan to expand the Louisiana plant that will process graphite mined in Mozambique into anodes, the positively charged electrode of a battery. The facility is expected to produce enough anodes for 2.3 million electric vehicles by 2040.

In February, the Department of Energy announced plans to provide $2.91 billion in grants to boost production of advanced batteries, fund refining and battery material production plants, cell manufacturing facilities and battery packs and recycling facilities.

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Reporting by David Shepardson in Washington Editing by Mark Potter and Tomasz Janowski

Our standards: The Thomson Reuters Trust Principles.

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