A supplier of lithium-ion batteries to the mining equipment space, Northvolt, has recently received conditional backing from the European Investment Bank for a €350 million ($385 million) loan that could finance Europe’s first home-grown gigafactory.

Northvolt said the EIB had provided an in-principle agreement for the financing – the largest ever direct EIB financing approval for battery technology – and, upon conclusion of a loan agreement, the funding would be supported by the European Fund for Strategic Investments (EFSI), the main pillar of the Investment Plan for Europe.

The Northvolt Ett lithium-ion battery cell gigafactory will be established in Skellefteå, northern Sweden, a region home to a prominent raw material and mining cluster with a long history of process manufacturing and recycling.

“Noting the region’s clean power base, building the factory in northern Sweden will enable Northvolt to utilise 100% renewable energy within its production processes,” Northvolt said.

Northvolt already supplies lithium-ion batteries to Epiroc for its battery-electric underground mining vehicles and is believed to supply at least one of other major mining OEM.

EIB Vice-President, Andrew McDowell, said: “The development of a competitive and green battery value chain within Europe can not only cut greenhouse gas emissions by decarbonising power generation and transport, but can also help protect millions of well paid jobs in European industries in the face of increasing global competition.”

Northvolt Ett will serve as Northvolt’s primary production site, hosting active material preparation, cell assembly, recycling and auxiliaries. The construction of the first quarter of the factory is expected to be completed in 2020. Ramping up to full capacity, Northvolt Ett will produce 32 GWh/y of battery capacity, the company said.

Peter Carlsson, Co-Founder and CEO of Northvolt, said: “This EIB in principle approval is a key moment in the process of finalising our capital raise to support the establishment of Northvolt Ett. Today, we are one step closer to our goal of building the greenest batteries in the world and enabling the European transition to a decarbonised future.”

The capital raise, in which this EIB loan would be included, will finance the establishment of the first 16 GWh of battery capacity production, with the batteries from Northvolt Ett targeted for use in automotive, grid storage, and industrial and portable applications.

Ibrahim Baylan, Swedish Minister for Business, Industry and Innovation, said: “Today’s decision by the EIB is very gratifying and a big step towards a large-scale battery production in the EU and a fossil-free welfare society. The decision shows that there are prerequisites in Sweden for sustainable battery production, it is important for Sweden and the rest of the EU to produce battery materials and battery cells, based on green, Swedish electricity.”