Novonix Ltd (ASX: NVX) shares are rocketing out of the gates on Tuesday morning.

At the time of writing, the battery materials and technology company's shares are up 16% to 68 cents.

Why are Novonix shares rocketing?

Investors have been buying the company's shares this morning after it made a major announcement.

According to the release, the U.S. Department of Energy (DOE) has conditionally committed a direct loan of up to US$754.8 million (~A$1.2 billion) to be applied towards partially financing a proposed new facility in Chattanooga, Tennessee.

The release notes that the proposed financing is being offered under the DOE Loan Programs Office's Advanced Technology Vehicles Manufacturing (ATVM) Loan Program.

The Chattanooga facility will manufacture synthetic graphite primarily for use in electric vehicle (EV) batteries. At full capacity, the new facility is expected to produce approximately 31,500 tonnes per annum (tpa) of synthetic graphite. This can support the production of lithium-ion batteries for approximately 325,000 EVs each year.

Management highlights that China currently has over 95% market share for battery grade graphite. The new facility is expected to reach full production capacity by the end of 2028 and is anticipated to create 450 full-time operational jobs and 500 construction jobs.

'Another critical milestone'

Novonix's CEO, Dr. Chris Burns, was very pleased with the news, highlighting that it is another major milestone. He said:

This announcement is the culmination of years of hard work and is another critical milestone for our anode materials business towards our target production of 150,000 tpa in North America. This conditional commitment from the government to invest in our new facility continues to underscore the focus on localizing critical materials in the battery supply chain, such as graphite.

Recent announcements from China to further scrutinize the export of battery-grade graphite to the United States highlight the importance of domestic production of high-performance, battery-grade synthetic graphite. Our offtake agreements with strong partners have strengthened our leadership in onshoring the synthetic graphite supply chain in North America and supporting the path towards U.S. energy independence.

What's next?

As mentioned at the top, this funding is conditional. The release notes that the DOE must complete an environmental review, and the company must satisfy certain technical, commercial, legal, environmental, and financial conditions before the DOE can decide whether to enter into definitive financing documents and fund the loan.

A binding loan agreement from DOE will also be subject to the satisfactory completion of due diligence by DOE, satisfaction of conditions precedent specified in the term sheet, approval of the Novonix board, receipt of required governmental and third-party consents, and the negotiation and execution of binding loan documents.