Element 25 Ltd (ASX:E25, OTCQX:ELMTF) has been selected for award negotiations for a US$166 million grant from the US Department of Energy (DoE) under the Battery Materials Processing Grant Program. This funding will support the construction of its proposed battery-grade high-purity manganese sulphate monohydrate (HPMSM) facility in Louisiana, USA.
Element 25 plans to build and operate a first-of-its-kind, environmentally sustainable 230,000 square-foot (~21,000 square metre) refining facility in the Baton Rouge area, Louisiana, to produce HPMSM — a critical raw material in lithium-ion batteries.
The DoE grant award comes in addition to the US$115 million already committed by offtake partners General Motors (NYSE:GM) LLC and Stellantis NV (NYSE:STLA, EPA:STLA).
Element 25 and DoE are expected to finalise a binding funding agreement for the grant “as soon as practicable”.
“This grant from the US Department of Energy, once finalised, represents a major milestone in our development of the Louisiana HPMSM Project and adds to the commitments already received from GM and Stellantis which include both offtake and financing agreements in support of the refinery,” said Element 25 managing director Justin Brown.
“The grant will fund up to half of the construction capital costs for the project and when combined with existing commitments, will propel the project towards financial close and commencement of construction, creating long-term jobs for Louisiana and delivering ethically sourced, IRA compliant HPMSM to our customers.”
Element 25’s project financing
Element 25 secured an US$85 million loan from GM in mid-2023, where the company would supply up to 32,500 metric tons of manganese sulphate annually for GM's Ultium battery plant requirements. This added to commitments from Stellantis, which include take-or-pay offtake commitments for 45,000 tonnes per annum of HPMSM over five years, alongside US$30 million in project funding.
The combined US$115 million in financing marked a significant cornerstone for the company's project financing activities.
Element 25 is now coordinating efforts to secure the remaining funding needed for the project's construction costs, which were estimated at US$289 million in its April 2023 Feasibility Study.
The DoE Battery Materials Processing Grants Program is designed to provide up to US$3 billion in grants to bolster the US battery materials processing industry. These funds may also be used to expand domestic manufacturing capabilities and enhance processing capacity, thereby supporting the broader battery supply chain.