Graphite developer Evion Group has secured a partnership with a leader in the lithium ion battery anode material sector that will give it a foothold in the emerging European battery market.

The collaboration agreement with offtake partner Urbix will see the companies assess the viability of developing a plant in Europe, assessing favourable site options and completing a corresponding feasibility study on the financial, technical and logistical considerations.

It comes less than two months after Evion (ASX:EVG) delivered a scoping study which showed it could deliver strong returns by using graphite concentrate from its Maniry project in Madagascar to move downstream.

A 30,000tpa plant with a capex bill of just US$117m would generate US$2.8b in pre-tax cash flow with an internal rate of return of 39.5%.

Urbix has previously committed via a non-binding offtake agreement to take 15,000 tonnes of graphite concentrate a year from Maniry, or around 40% of its future production, to feed its planned operations to produce coated spheroidised purified graphite.

But the new agreement will go a step further, with the companies eyeing off a slice of one of the world’s fastest growing markets for lithium ion batteries.

Urbix, which plans to use graphite from Evion’s Maniry project to feed the proposed plant, has developed a technology for producing CSPG which will deliver the product at less than 5% of the energy intensity of conventional Chinese producers.

It is developing a plant in Arizona to start production in 2025, a planned template to deploy additional facilities in the US and Europe which will displace battery anode materials out of China.

Additionally, it has co-signs from other major players as well, having recently signed a joint development agreement with South Korean battery maker SK On, a supplier for EVs produced by Ford, Hyundai and Volkswagen.

“We are delighted to extend our relationship with Urbix into the rapidly growing market for advanced battery anode material,” Evion managing director Tom Revy said.

“Processing graphite from our Maniry project into BAM is a major growth opportunity for Evion given the pivotal role BAM plays in the production of lithium batteries and the EV industry.

“Urbix is a highly experienced and well-regarded player in the BAM industry. Evion could not hope for a better partner as it looks to establish itself in this growth industry.”

Cleaner, greener graphite

Not only does Urbix’ technology use less than 5% of the energy required by Chinese processes to produce graphite battery anode material, but it also avoids dangerous chemicals, is 40% cheaper and achieves more than double the yield.

Incorporating both natural and synthetic graphite, Urbix aims to capture 30% or more of US and European market demand by 2031.

At conservative price assumption of US$7800 per tonne for CSPG, the market is expected to grow from US$5b to US$27b by 2030.

That is where Evion, with its advanced Maniry project comes into play. While technological advancement and market acceptance has brought about a big reduction in EV pricing, its penetration could be constrained by a shortfall in graphite supply.

It’s a situation that puts the ball firmly in Evion and Urbix’s court. The price of CSPG anode material is expected to increase in the short term and settle at a price advantageous to suppliers like Urbix and Evion.

Evion, in particular, is advantaged as a supplier of raw materials for the growing industry.

Should a feasibility study outcome be positive the collaboration agreement will be elevated to include a joint venture agreement to construct and operate the contemplated plant.

At that point the companies would become majority owners of the project alongside additional investors brought on board to finance the venture.

Urbix chairman and CEO Nico Cuevas said the partnership “is an exciting step forward in our shared goal of developing a plant in Europe to supply the EV sector with sustainable, high-quality batter grade anode material.”

“This expanding partnership will leverage the expertise of both companies to establish a sustainable supply chain for an essential component in the manufacturing of electric vehicles.

“We are elated to be working with Evion, and eager to accomplish the possibilities that can be achieved as we work together.”

Heading downstream

It is not the only initiative instigated by Evion to head downstream, having begun construction on a JV in India to produce expandable graphite with local firm Metachem.

Production and cashflow are due in the December quarter, utilising third party feed. It will eventually be supplied by concentrate feedstock from Maniry.

Its Maniry project is one of the few new natural graphite projects in the development pipeline across the world.

Boasting a post tax NPV of US$205m, the mine would deliver 39,000tpa of graphite concentrate in its first stage and 56,400tpa in its second stage after four years of operations over a 21-year mine life.

 

 

 

This article was developed in collaboration with Evion Group, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.