Elon Musk’s Supply Chain All Set To Change the Energy Sector

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Elon Musk’s Supply Chain All Set To Change the Energy Sector

The syrah graphiTe planT in vidalia, which is backed by millions in federal financing, is poised to treble in size to supply electric vehicles. A plain metal building surrounded by farm fields south of Vidalia may appear to be an unusual location for a key nexus of the electric vehicle sector.

But that's exactly what it's about to become. Since 2018, the Australian mining company Syrah Technologies has been processing the mineral graphite within the building as part of a pilot program. Lithium-ion batteries use graphite as a significant component.

Syrah plans to more than treble the plant's footprint with the support of a $107 million federal loan announced recently. This will result in the creation of 36 new employment as part of a project to build the first commercial-scale graphite processor in the United States, which will generate Active Anode Material, which is used in electric car batteries. It will give the corporation a presence in the expanding electric vehicle supply chain in the United States, having previously signed a deal to supply Elon Musk's Tesla from the plant. It also reflects how state authorities see the global energy transition toward greater renewable energy as an opportunity for rural Louisiana.

According to Louisiana Economic Development Secretary Don Pierson, Syrah could be the tip of the spear regarding clean energy technology in Louisiana.

"A number of components are going to be required," he stated. Louisiana companies "are well positioned to get into that" if demand grows, he added. According to Pierson, other businesses, such as solar and carbon capture, might also thrive in Louisiana's less inhabited areas. LED has made regenerating rural communities a priority, according to him.

'EXTREMELY LARGE'

Vidalia, in Concordia Parish, is located 90 miles north of Baton Rouge, directly across the Mississippi River from Natchez. Over a little more than 60 businesses in the area are already working with Syrah, according to Mayor Buz Craft, who took office in 2016. He expects a boost to the city's coffers.

"It's big," Craft said, not just for Vidalia but for the entire region. The company's growth "might result in around $2 million in sales taxes per year."

The Syrah land is only a few thousand feet from the river, allowing for easy shipping. Syrah is to invest $175 million in the facility, adding 180,000 square feet to the existing 50,000 square feet. Construction is ready to hit this year, with anode production beginning in 2023.

GLOBAL CONSEQUENCES

China is where the majority of graphite mining and processing takes place nowadays. According to Syrah CEO Shaun Verner, bringing the Vidalia facility expansion online will shorten the supply chain for U.S.-based battery and car manufacturers while also diversifying their supply source.

In December, Tesla agreed to buy 8,000 tonnes per year, or around 70%, of the Vidalia plant's output. The company received a conditional loan from the US Department of Energy, one of the first under a scheme promoted by the Biden Administration as a strategy to support domestic manufacturing of essential clean energy technology.

The funding comes from the federal Advanced Technology Vehicles Manufacturing Program, which was established in 2007 but has been inactive since 2011. Jigar Shah, a clean energy entrepreneur, was appointed to lead the Department of Energy's Loan Programs Office in 2021, with the mission of leveraging money to advance clean energy initiatives.

"Projects like Syrah Vidalia are essential to our national security, foreign policy, supply chain development, and economy," Shah said in announcing the financing. The program has previously offered loans to big automakers, but subsequent reforms have made loans to mining businesses eligible.The money isn't yet in Syrah's possession. Both the DOE and the company must complete due diligence and agree to a term sheet, which must be authorized by Syrah's board of directors.

Officials from the company and the federal government plan to finish by the end of June, with the Syrah receiving the first tranche of payments in September. In Louisiana, Syrah has not always been well received. Residents complained about the impact on local fisheries. Thus, the company's previous plan to build a factory in Port Manchac, Louisiana, was canceled.

Citizens crowded a public meeting in Vidalia in 2018 to express their concerns over the plant's air and water discharges. According to Craft, there hasn't been any recent pushback to the expansion plan.

LARGE ASPIRATIONS

The expanded plant will be able to generate 11,250 tonnes of Active Anode Material, a processed form of graphite, each year once it is up and running. The graphite will be mined by Syrah in Mozambique and then sold to electric vehicle manufacturers. Officials believe that this expansion is only the first phase. According to an energy department statement, the plant may create enough anode material for 2.5 million electric vehicles by 2040.

"Louisiana has all of the key ingredients for developing innovative manufacturing technology, including a vision for sustainable development that is in line with Syrah's values," Verner said. In October, Verner told an Australian television program that Vidalia is "very crucial for the manufacture of anode material for lithium-ion batteries."

The state will also aid the company with workforce development tax benefits under the Industrial Tax Exception and Quality Jobs programs. In 2019, the company was already granted one ITEP. Once Syrah is operational, Craft expects that the availability of land, easy access to the river, and low taxes will entice related enterprises to Concordia Parish.

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