➤ The U.S. Department of Energy's Loan Programs Office wants to advance President Joe Biden's decarbonization goals by backing critical mineral technologies.

➤ The DOE has expanded its criteria under the program to back critical mineral processing projects in a bid to increase the country's domestic supply of battery materials.

➤ The loans office has received more applications than at any time over the last 10 years and is processing 77 applications totaling $75.9 billion in financing requests.

Jigar Shah, director of the Loan Programs Office at the U.S. Department of Energy Source: U.S. Department of Energy

The U.S. Department of Energy's Loan Programs Office extended a conditional commitment on April 18 to lend up to $107 million to graphite company Syrah Technologies LLC, a subsidiary of Australian-headquartered mining company Syrah Resources Ltd. The loan would support an expansion of the company's Vidalia graphite plant in Louisiana, which is expected to provide enough anode material to make batteries for up to 2.5 million electric vehicles by 2040. If finalized, it would be the first loan provided by the DOE's Loan Programs Office under its Advanced Technology Vehicles Manufacturing program in over a decade.

S&P Global Commodity Insights spoke with Jigar Shah, director of the DOE's Loan Programs Office, to discuss what role the federal government should play in the country's transition to a low-carbon energy economy, and why more loans have not been extended over the past decade. The following conversation has been lightly edited for clarity and space.

S&P Global Commodity Insights: What do you see as the appropriate role for the federal government when it comes to helping the country transition to a low-carbon energy economy?

Jigar Shah: The Loan Programs Office has several key roles to play. One is to take on perceived technology risks. It steps in when commercial banks are too shy to. Secondly, when you have such huge volumes of deployment occurring — as you see with EVs or solar panels — you start to have critical minerals and supply chain constraints because the volumes are just so large. So, I think there is a responsibility on the part of the Loan Programs Office to see whether we can help move this forward faster and meet the president's goals of decarbonizing the electricity grid by 2035 and decarbonizing the entire economy by 2050.

We really are open for business and open to any and all technologies that reduce carbon emissions and help us to get on this pathway to decarbonization.

If finalized, the $107 million loan to Syrah Technologies would be the first loan from the Loan Programs Office under its Advanced Technology Vehicles Manufacturing program in about a decade. Why has it been so long since a loan has been finalized under this program?

In general, I'd say there are two pieces to this. One is getting applicants to trust that the effort they put into a loan application is worth it. Each submission requires a lot of time on behalf of the applicant. In the past, there was some sense that projects were taking too long to get processed or that people were making decisions in a highly political way. Ultimately, what we're trying to accomplish is making sure people believe they are getting a fair and efficient experience out of the Loan Programs Office.

How long does it take to process a loan application?

In terms of how efficiently we can process an application, we've basically set a benchmark of six to eight months for the office, which is very similar to commercial banks, frankly, for these really large, complicated loans. Once an application is submitted, then we have to do our full due diligence on a loan. We have to read all the hundreds of documents that get submitted. We hire consultants to help us determine whether the market was represented fairly by the applicant. That process usually does take six to eight months if the applicant is fully prepared. It is possible to go quickly, but it requires the applicants to have all the answers that we need at their fingertips.

We've had far more loan applications submitted under the Biden administration than we have had in the last 10 years. We have 77 active applications.

Why does a graphite facility fall under the DOE's Advanced Technology Vehicles Manufacturing program?

The Advanced Technology Vehicles Manufacturing program funded Ford Motor Co., Tesla Inc., Nissan North America Inc. and others in the past. The core of the program is to save fuel using alternative fuel vehicles, including EVs. That mandate expanded to include supply chains, which was interpreted to [include] battery manufacturing.

It is only in the last few years that the designation has been widened to include critical minerals. This program really was not advertised to support critical mineral applications in the past. And critical minerals applications require a lot of work — from getting permits and going through the [National Environmental Policy Act] process. For a lot of applicants, they may have been eyeing this program for some time, but they did not have all the paperwork in place to qualify for the program until recently. By critical minerals, we are really focused on processing, not mining. We're not funding the digging up of dirt. We're funding the refining of the ore into finished materials.

U.S. President Joe Biden and Energy Secretary Jennifer Granholm have made clear their commitment to strengthen America's critical mineral supply chains. What progress has been made toward this goal, and what plans do you have to accelerate it?

We have had major announcements made to build significant amounts of battery capacity here in the U.S. The Loan Programs Office has several billions of dollars worth of projects that have applied for loans in the battery manufacturing space and critical minerals space. Now, they have to finalize their designs and permits, and then they will have to start construction. But I do think that the intention to onshore the supply chains does have tangible results.

Mining and processing critical minerals come with environmental risks. How are you ensuring that projects funded by the DOE are taking the necessary steps to mitigate the climate impacts of producing critical minerals?

We certainly are asking mines to follow best practices and seek independent, [environmental, social and governance] certifications. But I think that to suggest that mining will be risk-free or problem-free is probably too high a standard. But we do want them to have the intention of meeting best practices.

Are you concerned the U.S. will be unable to compete or catch up to China when it comes to battery and EV production?

I would say that the industry is still young. We have over 1 billion cars in the world, and we have less than 10 million EVs in the world. When you think about where we need to get to, we probably need to grow the total battery supply chain by almost 20 times to be able to meet the needs of 2030 and 2035.

While China has traditionally dominated some of these supply chains, it is not necessarily going to dominate the supply chains in the 2030s. And most of the technologies in the battery space were invented here in the U.S. Then they were licensed by China to scale up manufacturing. I think the next generation of technologies in the battery space is also here in the U.S. This time, our intention is to scale the manufacturing of those other technologies up here and that's it.

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