Along the shore of the Tennessee River in Chattanooga, Australia’s Novonix is working to turn a former turbine plant into the first large-scale synthetic graphite facility in North America.
Several custom-built furnaces towering 20 meters high have been installed, with dozens more to come. The ones already in place are used to produce samples of the critical ingredient required for batteries used in electric vehicles and energy storage systems.
Novonix, which moved its headquarters to the southern US city this year from Australia, plans to begin mass production of the battery anode material next year and deliver it to Japanese battery maker Panasonic, in what would be a milestone for the US as it pushes to build its own supply chain for critical minerals and loosen China’s stranglehold.
“Virtually every battery manufacturer in the US is buying their material from China,” said Mike O’Kronley, CEO of Novonix, during a tour of the facility.
Founded in 2012 in Queensland, Australia, Novonix is part of a strategy by the US to establish a domestic supply of critical minerals. In 2024, the US imported 80% of the rare earth elements it used.
More than 85% of the world’s supply of graphite came from China last year, according to the International Energy Agency. China’s market share for battery-grade graphite was 96%, while Japan produces just over 2%.
Beijing’s dominance stretches beyond graphite to other key materials, from lithium to cobalt, as well as rare earths. These are essential materials for clean energy technology, defense systems, and semiconductors used in data centers.
The Chinese government flexed its muscles by imposing a series of export control regulations for critical minerals and rare earths, virtually stopping exports to the US throughout the year, as the world’s two largest economies remained embroiled in a trade war.
A deal announced on October 30 between the US and China included an agreement to “effectively eliminate” all current and proposed export controls on rare earths and other critical minerals. But China’s Ministry of Commerce said on November 8 that it would suspend a ban covering exports of gallium, germanium, and antimony while maintaining controls over seven rare earths used in magnets. It also relaxed regime checks for export licenses for graphite.
Prakash Sharma, vice president in charge of scenarios and technologies for Wood Mackenzie, said the concentration of the supply chain in China has given Beijing leverage over its trading partners. “Critical minerals have become the new strategic battleground: their availability and affordability will shape not just technology costs but also the balance of power in a new energy landscape. Resource nationalism is shifting from fossil fuels to critical minerals,” he said.
Alarmed by China’s hold on these materials, the Trump administration has moved to build a supply chain both domestically and in allied countries.
In August, the US Department of Energy (DOE) announced USD 1 billion in funding for companies to shore up domestic critical minerals production and supply chain resilience.
The Department of Defense and the DOE have also begun directly taking part in the private sector, marking a new phase in the way Washington approaches industrial policy. In August, the Pentagon said it would invest USD 400 million to become the largest shareholder of MP Materials, which will use the funding to construct a second domestic manufacturing facility.
In October, the government announced it would take a 10% stake in Trilogy Metals, a Canada-based company with mining claims in Alaska, and invest USD 35.6 million to support its exploration. That same month, it took a 5% equity stake in Lithium Americas as well as a 5% holding in its Nevada lithium mine joint venture with General Motors.
“There are also assets in allied, or at least non-China-allied, territories that we can partner with to gain access to raw materials, while also partnering with friends and allies to provide parallel, if not interim, solutions for midstream [in the supply chain],” said Rich Goldberg, a senior advisor at the Washington-based think tank Foundation for Defense of Democracies.
In October, the US and Australia agreed to spend a combined USD 8.5 billion to develop “priority” critical minerals projects, and unveiled a policy framework for financing such projects.
Goldberg said he does not expect the US to catch up quickly with China, but that for national security reasons “there are bottom-line numbers that you just have to be able to acquire as a country. You have to be able to get access to a certain amount of material and process a certain amount of material at scale, [and] be able to manufacture a certain amount of magnets and other products using those minerals and metals.”
Under former US President Joe Biden, Novonix secured a USD 755 million loan to begin construction of its second plant before its Chattanooga riverside facility is fully operational in 2028. At its maximum capacity, the ASX-listed company is expected to produce 20 kilotons of synthetic graphite, which is equivalent to 10% of the market, O’Kronley said.
The battery materials company, which counts South Korea’s LG Energy Solution as a shareholder, is “actively interacting” with the Trump administration to align itself with the country’s critical mineral needs.
Asked if Novonix would allow the federal government to own part of it, O’Kronley appeared receptive. “We’re open to having the discussion. The devil is always in the details,” he said.
Private investors, including JP Morgan, have followed the White House’s lead, committing trillions of USD over the next decade to strengthen domestic supply chains, including for critical minerals and manufacturing.
“The government’s strategy is actually effective so far, at least, of driving capital and creating stability for the companies that are deemed to be doing something that is critical to national security,” said a person familiar with the Trump administration’s thinking.
Among raw materials used in lithium-ion batteries, graphite is the most difficult to source from countries outside of China, according to industry executives. The US tax and budget bill this year introduced regulation that will phase in restrictions on companies looking to claim tax credits if they source critical minerals from China beginning 2030.
In July, the US Commerce Department also set anti-dumping and countervailing duties of 105% on anode-grade graphite imported from China. Additional levies, including those imposed under Section 301 and Trump’s so-called reciprocal tariffs, bring the total rate up to 150%.
These policies will spur US demand and boost the domestic critical minerals business, according to Novonix.
Graphite, a crystalline form of carbon, is used in a battery’s anode to ensure a stable and long charge. It can be mined or produced from petroleum coke, a byproduct of the oil refining industry. There are no natural graphite mines currently in the US, and while reserves are available, tapping them would be economically unviable, according to researchers at the University of Michigan.
Instead of mining, Novonix’s proprietary graphite process uses petroleum coke from refineries owned by Phillips 66. Processing the ground-up rock, which includes heating it to 5,400 degrees Celsius, produces a hyperpure form that is more consistent and durable than its natural form, though this approach can be much more expensive.
The company signed contracts with Panasonic and PowerCo. It has supplied samples to 13 others and in September, it delivered its first mass produced sample to an industrial firm. An agreement between carmaker Stellantis and Novonix was terminated in November over disagreements over product specifications.
The company will have invested about USD 1.5 billion into Chattanooga, and is expected to more than double its team of 130 at full capacity.
“We’re effectively at the forefront of this critical minerals crisis and the US government really wants to get behind and fund,” said O’Kronley. “So we’re a big part of that and we’re bringing industry partners along and supporting that mission of bringing and refining these critical minerals in the US.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.