(Reuters) -Battery recycling firm Redwood Materials said on Thursday it has closed a $350 million funding round led by venture capital firm Eclipse Ventures, with participation from new investors including Nvidia's ( NVDA ) investment arm, NVentures.

The fundraise for Redwood comes at a time when boosting domestic supply of critical materials has become a priority for several countries around the world, while growing use of artificial intelligence technologies have resulted in massive energy demand.

Nevada-based Redwood operates in both those areas - it recovers critical elements including lithium, cobalt, nickel, and copper by recycling batteries, and deploys energy storage systems that provide grid services and power data centers.

"This is a pivotal time for both Redwood and the United States, as curtailment in international supplies overlaps with intense domestic demand growth for these same materials and energy products," the company said in a statement.

Founded in 2017, Redwood is led by chief executive J.B. Straubel, a co-founder and director of Elon Musk's Tesla. Straubel was also chief technology officer at Tesla until 2019, when he left the EV maker to scale Redwood.

The firm has struck partnerships with companies across the automotive, battery manufacturing and tech industries, including Volkswagen, Panasonic, Toyota and Lyft.

Redwood, which was valued at $5 billion after an August 2023 fundraise of $1 billion, said it would use the new capital to boost expansion of its energy storage operations, its materials production capacity and its employee base.

(Reporting by Deborah Sophia in Bengaluru and Ernest Scheyder; Editing by Saumyadeb Chakrabarty)