American Materials Bond Series
American Materials Bond Series · Document 2 of 3
Energy Policy Act of 2005 · Title XVII · Conditional Commitment Letter

The Loan Guarantee

What Document 2 looks like when someone signs it. Authority: Energy Policy Act of 2005, Title XVII, 42 U.S.C. § 16511 et seq. No new legislation required.

The sequence and why it matters
Document 1 established the government as a committed buyer at a price floor that makes the facility economically viable. This document — the DOE conditional commitment — is the mechanism that converts that committed revenue stream into bankable construction debt. With an offtake agreement on one side and a federal loan guarantee on the other, the private debt markets will finance the facility. The government's actual cash exposure may be zero. If the facility operates as projected, the loan is repaid from cash flow, the guarantee fee generates revenue for Treasury, and the DOD offtake functions as a floor that commercial demand never reaches. The government built the infrastructure of a domestic graphite industry and paid nothing for it except its word, deployed twice.
Why this is not government spending
A loan guarantee is a contingent liability, not an appropriation. The government is not writing a check. It is co-signing the loan. If the facility operates and the borrower services its debt — which the DOD offtake agreement makes highly probable — the government's cost is the administrative expense of issuing and monitoring the guarantee, offset by the guarantee fee paid by the borrower. The Congressional Budget Office scores loan guarantees at their expected cost, net of fees and recovery. A well-structured guarantee on a facility with a ten-year federal offtake agreement and a domestic energy-transition mandate will score close to zero. The LNG terminal guarantees issued under the same Title XVII authority in the early 2010s are the precedent. Sabine Pass was built. The government was repaid. The United States became a net LNG exporter. The guarantee cost the taxpayer nothing and built an industry.
Illustrative
United States Department of Energy
Loan Programs Office
Conditional Commitment for Loan Guarantee
Issued pursuant to Title XVII of the Energy Policy Act of 2005, as amended
Commitment Number:DOE-LPO-2026-XVII-CRIT-0019
Authority:Energy Policy Act of 2005, Title XVII, 42 U.S.C. § 16511 et seq.; 10 C.F.R. Part 609
Applicant:[DOMESTIC GRAPHITE PROCESSOR]
Project Name:Domestic Battery-Grade Graphite Processing Facility
Project Location:[LOCATION], United States
Maximum Guarantee Amount:$126,000,000 (One Hundred Twenty-Six Million Dollars)
Date of Issuance:_____________, 2026
Commitment Expiration:_____________, 2027 (12 months from issuance)

I. Introduction and Purpose

The Department of Energy Loan Programs Office ("DOE" or "Department") hereby issues this Conditional Commitment for a loan guarantee ("Commitment") to [DOMESTIC GRAPHITE PROCESSOR] ("Borrower") in connection with the construction and commissioning of a battery-grade graphite processing facility ("Project") at [LOCATION], United States.

This Commitment is issued pursuant to Title XVII of the Energy Policy Act of 2005, as amended (42 U.S.C. § 16511 et seq.), which authorizes the Department to guarantee loans for projects that employ innovative or significantly improved technologies that avoid, reduce, or sequester air pollutants or greenhouse gas emissions and that are located in the United States.

The Department has determined that the Project qualifies for a loan guarantee under Title XVII on the following grounds: (a) the Project employs flash Joule heating technology for graphite purification that represents a significant improvement over conventional hydrofluoric acid purification methods, substantially reducing toxic chemical use and process emissions; (b) the Project will process feedstock from domestic acid mine drainage treatment operations, converting an ongoing environmental liability into a critical industrial material; and (c) the Project advances domestic production of battery-grade graphite, a material essential to the electrification of the American transportation sector and the decarbonization of the domestic energy system.

II. Findings and Eligibility Determinations

2.1 Technology Eligibility. The Department finds that the Project employs flash Joule heating ("FJH") graphite purification technology, which achieves 99.95% or greater carbon purity through a millisecond electrical discharge process that eliminates the need for hydrofluoric acid or other hazardous purification chemicals used in conventional processing. The Department further finds that FJH technology represents a significant improvement in the commercial application of graphite purification and that the Project constitutes a first commercial-scale domestic deployment of this technology for battery-grade anode material production.

2.2 Environmental Benefit. The Department finds that the Project will: (a) eliminate hydrofluoric acid use from the domestic graphite purification process, reducing associated toxic air emissions and wastewater generation; (b) process acid mine drainage treatment precipitates from domestic coal mining operations, converting material currently managed as an environmental liability into a productive industrial feedstock; and (c) reduce the lifecycle greenhouse gas intensity of battery-grade graphite supplied to domestic battery manufacturers by eliminating transoceanic shipping from the current supply chain.

2.3 Creditworthiness. The Department finds that the Project is reasonably anticipated to generate revenues sufficient to repay the guaranteed obligation, based on the following factors:

(a) The Borrower has executed a ten-year Strategic Materials Procurement Agreement with the United States Department of Defense under Defense Production Act Title III authority (Agreement No. DPA-III-2026-CRIT-0047), which establishes a committed government offtake at a price floor of $14,500 per metric tonne for 5,000 metric tonnes per year at full rate, providing a minimum annual revenue floor of $72,500,000;

(b) The committed government offtake revenue, at minimum purchase quantities and price floor, is projected to service the guaranteed debt obligation with a debt service coverage ratio of not less than 1.45x throughout the loan term;

(c) The Borrower has secured binding equity commitments totaling $54,000,000, representing 30% of total project cost, from qualified domestic investors through the American Materials Fund instrument established by Treasury Department rulemaking;

(d) Independent engineering review has confirmed the technical feasibility of the Project design and the reasonableness of the construction cost estimate of $180,000,000.

2.4 New or Significant Improvement. The Department finds that the Project represents a new or significantly improved technology pursuant to 42 U.S.C. § 16513, based on the first commercial-scale domestic deployment of FJH purification for battery-grade graphite and the novel integration of acid mine drainage feedstock aggregation with commercial battery material production.

III. Terms of the Conditional Commitment

3.1 Guarantee Amount and Coverage. Subject to the conditions set forth in Section IV, the Department commits to guarantee up to $126,000,000 (One Hundred Twenty-Six Million Dollars), representing seventy percent (70%) of total eligible project costs of $180,000,000. The guaranteed obligation shall be senior secured debt issued to one or more eligible lenders ("Lender") in a form approved by the Department.

3.2 Loan Terms. The guaranteed loan shall conform to the following parameters:

ParameterRequirement
Maximum term18 years from first disbursement
Interest rateFixed; not to exceed Treasury rate + 150 basis points at closing
AmortizationLevel debt service beginning in month 24 (construction + 12 months)
SecurityFirst lien on all Project assets; assignment of DOD Offtake Agreement; pledge of Project revenues
DSRASix months debt service reserve account, funded at financial close
RecourseLimited to Project assets and revenues during operations; full recourse during construction

3.3 Guarantee Fee. The Borrower shall pay to the Department a loan guarantee fee equal to 1.0% per annum of the outstanding guaranteed principal balance, payable semi-annually. This fee reflects the Department's assessment of the credit risk of the guaranteed obligation taking into account the DOD offtake agreement, the domestic sourcing mandate, and the projected debt service coverage ratios. The guarantee fee shall be payable throughout the term of the guaranteed loan and shall not be waived or reduced except by written determination of the Secretary of Energy.

3.4 Equity Requirement. Prior to first disbursement of the guaranteed loan, the Borrower shall have contributed or caused to be contributed equity of not less than $54,000,000 (thirty percent of total project cost) to the Project. Equity raised through the American Materials Fund instrument shall qualify for this requirement. No disbursement of guaranteed loan proceeds shall occur prior to full equity contribution.

3.5 Use of Proceeds. Guaranteed loan proceeds shall be used exclusively for: (a) construction and commissioning of the Facility as described in the Project application; (b) procurement of long-lead equipment items identified in the independent engineer's report; (c) funding of the debt service reserve account; and (d) payment of financing costs approved by the Department. Guaranteed loan proceeds shall not be used for working capital, feedstock purchases, or operating expenses during the ramp-up period.

IV. Conditions Precedent to Guarantee Issuance

The Department's obligation to issue the definitive loan guarantee agreement is conditioned upon satisfaction of each of the following conditions prior to the Commitment Expiration date:

4.1 Financial Close. The Borrower shall have achieved financial close on the guaranteed loan with an eligible lender acceptable to the Department, on terms consistent with Section III of this Commitment.

4.2 Equity Confirmation. The Borrower shall have provided evidence satisfactory to the Department of equity contributions of not less than $54,000,000, including documentation of American Materials Fund investor subscriptions and any other equity sources.

4.3 DOD Offtake Confirmation. The Borrower shall have provided to the Department a certified copy of the fully executed DOD Strategic Materials Procurement Agreement (DPA-III-2026-CRIT-0047) and confirmation that all conditions precedent therein have been satisfied or waived. Any material amendment to the DOD Offtake Agreement shall require Department consent prior to guarantee issuance.

4.4 Permits and Approvals. The Borrower shall have obtained all federal, state, and local permits, licenses, and approvals required to commence construction of the Facility, including but not limited to applicable EPA air and water permits and state environmental authorizations.

4.5 Construction Contract. The Borrower shall have executed a fixed-price, date-certain engineering, procurement, and construction contract with a qualified contractor for construction of the Facility, in form and substance acceptable to the Department and the Lender.

4.6 Insurance. The Borrower shall have obtained, and shall maintain throughout construction and operations, insurance coverage of the types and in the amounts required by the Department and the Lender, including builders' risk insurance during construction and property and casualty insurance during operations.

4.7 Domestic Sourcing Certification. The Borrower shall have provided a certification, in form satisfactory to the Department, that all Project feedstock will qualify as domestic feedstock as defined in the DOD Offtake Agreement and that no foreign adversary entity holds any beneficial ownership interest in the Borrower or any feedstock supplier.

4.8 No Material Adverse Change. Between the date of this Commitment and the date of guarantee issuance, there shall have been no material adverse change in the financial condition of the Borrower, the technical or commercial feasibility of the Project, or the status of any permit, approval, or agreement material to the Project.

V. Reporting and Monitoring

5.1 Construction Monitoring. During construction, the Borrower shall provide to the Department monthly progress reports prepared by the independent engineer, including construction progress, cost-to-complete, schedule status, and any material deviations from the approved Project plan.

5.2 Operating Reports. Following commencement of commercial operations, the Borrower shall provide to the Department quarterly operating reports including production volumes, feedstock sourcing documentation, revenue and expense summary, debt service coverage calculation, and employment levels.

5.3 Annual Audit. The Borrower shall provide to the Department, within 120 days of each fiscal year end, audited financial statements prepared in accordance with generally accepted accounting principles by an independent auditor acceptable to the Department.

5.4 DOE Site Access. The Department shall have the right, upon reasonable notice, to inspect the Facility and review the Borrower's records related to the Project throughout the term of the guaranteed loan.

VI. Representations and Warranties

By accepting this Commitment, the Borrower represents and warrants that: (a) all information provided to the Department in connection with the Project application is true, correct, and complete in all material respects; (b) the Borrower has full legal authority to execute and perform its obligations under this Commitment and the definitive guarantee agreement; (c) no litigation, regulatory proceeding, or governmental investigation is pending or threatened that would materially affect the Project or the Borrower's ability to perform; and (d) the Project, as described in the application, complies with all applicable federal, state, and local laws and regulations.

VII. Miscellaneous

7.1 Commitment Expiration. This Commitment shall expire on the date set forth in the header above unless extended in writing by the Department. The Department may, in its sole discretion, extend the Commitment for up to an additional six months upon written request from the Borrower demonstrating good cause for the extension and satisfactory progress toward satisfaction of the conditions precedent.

7.2 Non-Binding Nature of Commitment. This Commitment does not constitute a guarantee and does not obligate the Department to issue a loan guarantee. The Department's obligation to issue the definitive loan guarantee agreement is conditioned upon satisfaction of all conditions precedent set forth in Section IV and execution of a definitive loan guarantee agreement acceptable to the Department, the Borrower, and the Lender.

7.3 Compliance with Federal Requirements. The guaranteed loan and the Project shall comply with all applicable federal requirements including the National Environmental Policy Act, the Davis-Bacon Act, and applicable procurement regulations.

7.4 Governing Law. This Commitment and the definitive loan guarantee agreement shall be governed by federal law.

Executive Director, Loan Programs Office
United States Department of Energy
Date: _______________________
This Conditional Commitment is issued for informational and planning purposes. Issuance of a definitive loan guarantee is subject to satisfaction of all conditions precedent and execution of final documentation. This Commitment does not constitute an obligation of the United States or an appropriation of federal funds.
The 70/30 structure — why these numbers
The Department is guaranteeing 70% of project cost. The Borrower is contributing 30% equity. This ratio is standard for Title XVII project finance — it reflects the same structure DOE used for the Vogtle nuclear expansion, the Ivanpah solar facility, and the Solana concentrating solar project. The equity requirement is high enough to ensure the Borrower has real skin in the game. The guarantee coverage is high enough to make the guaranteed tranche attractive to institutional lenders at investment-grade pricing. At 70%, the lender's unguaranteed exposure is $54 million on a $180 million project backed by a ten-year federal offtake. That exposure will be oversubscribed.
Section 2.3(c) — the American Materials Fund equity
This clause is the load-bearing connection between all three documents. The DOE guarantee requires 30% equity at financial close. The Treasury rulemaking in Document 3 creates the American Materials Fund account category — a tax-advantaged retirement instrument that allows individual Americans to direct a portion of their IRA or 401(k) into qualified domestic critical materials facilities. The $54 million equity requirement in this document is what that instrument was designed to fill. The private retirement system capitalizes the equity. The DOE guarantee makes the debt bankable. The DOD offtake makes the revenue certain. No single document works alone. All three together make the facility inevitable.
The Sabine Pass precedent — and what it proves
Sabine Pass LNG terminal was built using the same Title XVII authority. DOE issued conditional commitments. Private capital structured the project finance. Cheniere Energy raised the debt against the commitments. The facility was built. The government guarantee was never called. The United States went from LNG importer to the world's largest LNG exporter in under a decade. The guarantee cost the taxpayer nothing and built an industry that now generates tens of billions in annual export revenue. The graphite facility in this document is smaller, simpler, and less technically novel than Sabine Pass. If the mechanism worked there, it works here. The only question is whether anyone signs the paper.

Authority & Precedent

  1. Energy Policy Act of 2005, Title XVII, 42 U.S.C. § 16511 et seq. Primary statutory authority for this Commitment. Title XVII authorizes DOE to guarantee loans for projects employing new or significantly improved technologies that avoid, reduce, or sequester air pollutants or greenhouse gas emissions.
  2. 10 C.F.R. Part 609 — DOE implementing regulations for the Title XVII loan guarantee program. Establishes application requirements, underwriting standards, guarantee fee structures, and monitoring requirements.
  3. Sabine Pass LNG terminal — Cheniere Energy received a DOE conditional commitment under Title XVII authority. The facility was financed, constructed, and began operations in 2016. The government guarantee was not called. The United States became a net LNG exporter for the first time in decades. Total DOE cost: administrative overhead and guarantee fee income, net positive.
  4. Vogtle Units 3 and 4 — Georgia Power received a DOE loan guarantee of $8.33 billion under Title XVII for nuclear plant expansion. The guarantee covered approximately 70% of project cost, consistent with the structure in this document. The Vogtle experience also demonstrates the importance of fixed-price construction contracts and independent engineering oversight, both required as conditions precedent here.
  5. Flash Joule Heating graphite purification — technology developed at Rice University under James Tour. Achieves 99.9%+ carbon purity through millisecond electrical discharge, eliminating hydrofluoric acid from the purification process. First commercial applications demonstrated 2022–2024. The Project represents first commercial-scale domestic deployment for battery anode material production.
  6. Acid mine drainage REE and graphite feedstock — Department of Energy National Energy Technology Laboratory has documented recoverable graphite-bearing material in Appalachian acid mine drainage treatment streams. The CMEI funding announcement (March 2026) identified AMD treatment as a priority feedstock source for domestic critical mineral recovery.
  7. Note on illustrative nature: The applicant, project location, and execution date are illustrative. All statutory authority citations, financial parameters, and structural provisions are designed to reflect current DOE Loan Programs Office practice and Title XVII requirements. The debt service coverage ratios, guarantee fee, and equity percentages are consistent with historical Title XVII transactions.