US Department of Energy launches $500 million drive to boost critical minerals and battery manufacturing

The U.S. Department of Energy has opened a $500 million competitive funding round to accelerate domestic capacity for critical minerals processing, battery materials manufacturing and recycling, signalling a major federal push to shorten supply chains for advanced batteries used in energy, transport, defence and grid resilience.

According to the Department of Energy, the Notice of Funding Opportunity (NOFO), issued by the Office of Critical Minerals and Energy Innovation’s Manufacturing Deployment Office, targets three distinct tracks: building processing capacity from raw feedstocks; scaling recycling of manufacturing scrap and end‑of‑life batteries; and expanding commercial‑scale battery materials, components and cell manufacturing. Applications must be submitted by 24 April 2026, with award notifications expected in the second quarter of 2026 and negotiations scheduled for the third quarter. The DOE is also compiling a Teaming Partner List to help prospective applicants form project consortia.

Structure and scale
The NOFO allocates roughly $200 million to processing from raw feedstocks, about $100 million to recycling and roughly $200 million to battery materials and component manufacturing. Awards will be substantial: processing grants are expected to range from $50 million to $100 million across two to four projects; recycling awards are anticipated at $50 million–$100 million for one or two projects; and manufacturing awards will support new commercial facilities (minimum awards of $100 million) as well as retrofits or expansions (minimum $50 million), distributed across one to four projects.

The DOE sets concrete production expectations at the close of each award’s performance period. Processing projects should be capable of producing, domestically, tens of thousands of tonnes per year in forms applicable to batteries , for example, 10,000–25,000 tonnes/year of lithium, 5,000–15,000 tonnes/year of nickel and 2,000–3,000 tonnes/year of cobalt. Recycling projects are expected to deliver high volumes of recovered intermediate products, including 45,000–90,000 tonnes/year of black mass and measurable yields of graphite, nickel, cobalt pCAM, copper and rare earths. Manufacturing projects should be able to produce materials and components at scale (metric targets include thousands of tonnes per year of coated electrodes, active powders and metal components, and about 2 GWh/year of cells).

Policy aims and prioritisation
The NOFO is explicitly designed to strengthen U.S. supply‑chain resilience and to reduce reliance on foreign sources for key minerals and battery components; the DOE states the programme aims to reduce dependence on non‑domestic supply chains by up to 15% for targeted materials by 2030. The competition prioritises projects with secured feedstock and offtake agreements, technical approaches that lower cost or raise yield, and those likely to reach commercial operation within an expected 36‑month timeframe. Projects that produce multiple critical materials, deploy North American‑owned intellectual property, and represent industry consortia will be favoured.

Consistent with statutory direction, applicants must demonstrate reduced involvement of entities defined as foreign entities of concern (FEOCs). DOE’s guidance references Section 40207(a)(5) of the Infrastructure Investment and Jobs Act and the 10 U.S.C. definition of covered nations, and advises that applicants show prime and subrecipients, offtake partners and supply chains are not owned, controlled or subject to the jurisdiction of those governments. The Department will consider the degree to which proposed projects minimise market control by FEOCs when prioritising awards.

Eligibility, cost share and potential DOE equity
Only U.S. domestic entities may serve as recipients or subrecipients; eligible applicants include higher education institutions, nonprofits, for‑profit firms, state and local governments and consortia. Domestic status requires formation under U.S. law, majority domestic ownership and control, and a physical U.S. presence. The DOE will entertain waiver requests for foreign participants, but such arrangements must be submitted with the application.

Demonstration‑scale awards require a minimum private cost share of 50% that cannot be financed with other federal funds. The NOFO also notes DOE’s interest in, and historical precedent for, taking direct equity or similar financial stakes in strategic industrial projects; applicants may indicate willingness to offer equity, and past federal investments have ranged from minority equity to warrants, options and revenue‑sharing structures. The Department’s statement framed equity participation as a negotiable element of award terms.

Program context and complementary initiatives
The Battery Manufacturing and Recycling Grants programme, which administers the NOFO, is part of a broader federal effort to commercialise and scale technologies across mining, processing and manufacturing stages. DOE materials describe companion initiatives , including the Critical Minerals Innovation Hub and the METALLIC initiative , intended to accelerate deployment of novel extraction, refining and recycling technologies and to demonstrate commercial viability for processing lower‑grade ores, tailings and waste streams.

Industry observers have highlighted that the funding round forms one component of nearly $1 billion in recent DOE announcements aimed at securing domestic supplies of rare earths and other critical materials. The emphasis on recycling capacity and recovery from waste streams reflects a strategic interest in circularity as well as new primary production.

Practical considerations for applicants
DOE recommends that applicants and potential subrecipients use the Teaming Partner List to identify collaborators, ensure clarity on feedstock and offtake contracts, evaluate exposure to FEOCs across the value chain, and plan project phasing that can meet the 36‑month performance expectations (planning; permitting; construction; commissioning and qualification). Proposals that can credibly demonstrate multiple revenue streams , for example, combined processing and recycling outputs or material and component manufacture , and that leverage technologies to reduce operating costs and improve yields are likely to score well under merit review criteria.

For industrial decarbonisation stakeholders, the NOFO presents an opportunity to align scale‑up of low‑carbon battery supply chains with operational emissions reductions and circularity goals. Firms and public entities preparing bids should factor in permitting timelines, potential local supply‑chain constraints, and the substantial private capital requirement implied by the 50% cost‑share threshold.

Application timetable
Applications are due by 24 April 2026. Successful applicants are expected to be notified in Q2 2026, with award negotiations to follow in Q3 2026. The DOE’s online guidance pages and the Battery Manufacturing and Recycling Grants programme materials set out eligibility details, merit review criteria and application procedures.

According to coverage by sector outlets and trade press, the funding round has prompted active interest from firms across mining, recycling and battery manufacturing sectors, reflecting broad industry appetite for federal support to establish economically viable, resilient North American battery supply chains.