The global demand from original equipment manufacturers (OEM) in Europe and North America is driving the need for diversification of battery chemical supply chains globally, to manage risk from monopoly players in the market.
It has also provided an opportunity for the Kingdom of Saudi Arabia to capitalise on this demand, along with its strategic geography and geopolitical alignment, to transition its economy from being a global leader in fossil fuel production to be a global leader in the production of high purity chemicals and cathode active materials.
Saudi-backed and Perth-headquartered EV Metals Group plc has positioned itself as a strategic partner in facilitating this pivot in the Kingdom through developing a world-first, fully integrated battery chemicals complex in the industrial city of Yanbu, where it will leverage significant investments in upstream resource development and local beneficiation in Western Australia to feed that OEM demand.
Addressing the final session of Paydirt’s Battery Minerals Conference yesterday, EV Metals managing director Michael Naylor explained to delegates the scale of the massive investments being committed to EV platforms at OEM level, something in the order of $1 trillion a day for battery cell and vehicle manufacturing plants.
“The key is this, the level of investment in the upstream supply chain for critical raw materials is not sufficient to supply the demand growth from OEMs, who appear oblivious to the threats of disruptions to their global growth plans,” Mr Naylor said.
“The development plans of new electric vehicle manufacturing companies and new battery cell manufacturers, who have not secured long term offtake agreements to support development and growth are fatally flawed.”
“You may ask, what is in it for Australia? EV Metals will implement the upstream integration and development of supply chains for critical raw materials through joint ventures and offtake agreements with Australian companies, focused on Western Australia.
“WA is a politically stable jurisdiction with low sovereign risk and transparent supply chains. Frankly speaking, it’s an easy sell in countries like the Kingdom. In January this year, EVM launched the Australian Lithium Alliance as a strategic initiative to partner with Australian companies to fund and accelerate exploration, development, mining and production of lithium as an alternative to Chinese companies that currently dominate the purchase of spodumene concentrate.”
The first agreement signed by the Australian Lithium Alliance was with ASX-listed Zenith Minerals (ASX: ZNC), which is now free-caried through to a final investment decision on its WA lithium projects and EV Metals will fund all capital expenditure to the commencement of commercial production at which time Zenith will start to repay its share of capital for the processing plant.
“We estimate $30 million of expenditure to final investment decision and a further $332 million in capital expenditure for a spodumene concentrate (6%) plant processing 2.4 million tonnes of ore to produce 330,000 tonnes per annum of SC6,” he said.
“This is foreign direct investment in Western Australia, one of the objectives outlined by the Minister for Mines and Petroleum Bill Johnston in the opening address this morning.”
While the priority has been sourcing lithium to supply its first processing train at the lithium chemical plant (currently at FEED stage) as part of the staged development of the broader integrated battery chemicals complex in the Kingdom, EV Metals has also advanced feasibility studies for a mixed hydroxide precipitate plant (MHP) to produce 170,000 tonnes of product for its proposed nickel chemicals plant to be co-located within the complex.
The MHP plant study was based on the company’s Range Well nickel-cobalt resources in the Mid-West region of Western Australia. The estimated expenditure for the development of the MHP plant is US$3 billion.
“Let’s be clear about a few things. Having worked with Andrew [Forrest] and watched Murrin Murrin be built and be further built, the plant is going to cost what it costs,” Mr Naylor said.
“There is no way to reduce the capex. If people talk about building a mixed hydroxide precipitate plant for anything less than US$3 billion, they are kidding themselves.”
The forecast global supply gap in nickel is not going to be filled with production from sulphide deposits, it is going to require the exploitation of more common laterite deposits that require a MHP plant to extract the payable elements from the ore.
