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(Bloomberg) -- Shares in Australian synthetic graphite maker Novonix Ltd. surged after it received a conditional $755 million loan from the US Department of Energy to build a manufacturing plant in Tennessee.

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Novonix rose as much as 16% on Tuesday before paring some of its gains to A$0.615 cents a share at 2:44 p.m. Sydney time, valuing the company at A$349 million ($222 million).

The new plant will annually produce about 31,500 tons of synthetic graphite, which is key to manufacturing lithium-ion batteries in electric vehicles and smart phones, Novonix said in a statement Tuesday. The material will primarily be destined for EV makers in North America. Battery-grade graphite can either be mined or produced synthetically.

Funds are contingent on a binding loan agreement with the Department of Energy and due diligence, according to the statement. The department said in a separate statement that the conditional commitment isn’t final. That means there’s a possibility it could be reversed by the Trump Administration if not completed by the Jan. 20 inauguration.

China currently holds a 95% market share for battery grade graphite, according to Novonix. The nation has recently moved to control exports of the battery component, a move that alarmed the West.

“Recent announcements from China to further scrutinize the export of battery-grade graphite to the US highlight the importance of domestic production of high-performance, battery-grade synthetic graphite,” Novonix Chief Executive Officer Chris Burns said in the statement.

The company already has binding offtake agreements to supply Panasonic Energy Ltd., Stellantis NV, and PowerCo SE.

(Updates details on Department of Energy Loan Programs Office in fourth paragraph. Updates share price.)

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