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Australia’s public export finance institution has conditionally approved the first loans to be rolled out under a financing scheme to develop the country’s critical mineral sector.

Export Finance Australia (EFA) has offered two loans worth a total of A$239mn (US$170mn) to two companies developing graphite processing projects for the supply chains of electric vehicle batteries.

Australia and allies such as the US, Japan and India are keen to bolster their roles in electric vehicle supply chains to make them less dependent on China.

While Australia has large known deposits of some critical minerals, it has negligible downstream processing capacity.

The A$2bn facility announced in October last year is designed to help critical mineral producers “get established so they can link up with others in our supply chains in a free and open Indo-Pacific”, Australian prime minister Scott Morrison said at the time.

“The government’s support for these projects… is a clear demonstration of our faith in the potential of Australia’s critical minerals sector,” says Australian trade minister Dan Tehan.

“At a time of booming global demand for smartphones, electric vehicles and other technologies this commitment from the Australian government positions Australia strongly into the future in the critical minerals sector.”

Both loans are provided by EFA under its national interest account, meaning that while they are administered by the agency, the federal government receives all the income from the loans and carries the risk.

Renascor, a company based in the state of South Australia, is set to borrow A$185mn under the arrangement for its Siviour graphite project, which includes both graphite mining and production of battery anode material for export to manufacturers in Asia. The loan covers most of the project’s expected capital expenditure of A$204mn.

The company has signed non-binding offtake agreements with importers in China, Japan and South Korea and expects to make a final investment decision on the project this quarter, according to a securities filing. Construction is planned for next year and production is slated for 2024.

Renascor’s managing director David Christensen says the loan will help “develop a world class, globally competitive downstream processing capability in a critical mineral that is fundamental to the development of the electric vehicle revolution”.

EcoGraf, based in the state of Western Australia, is set to borrow up to US$40mn under the facility to fund the expansion of its battery anode production facility, with plans for future production of 20,000 tonnes per year.

EcoGraf has signed a non-binding offtake agreement with South Korean conglomerate Posco.

Both loans are conditional on EFA’s due diligence and other obligations by both companies, while EcoGraf’s is also tied to the completion of its existing, smaller production facility.

The loans were fully funded by the Australian government without participation from commercial lenders.