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Battery graphite manufacturer catering to the growing demand of high-quality graphite for the lithium-ion battery market, EcoGraf Limited (ASX:EGR) has recently signed a letter of intent with ASX-listed GR Engineering Services Limited (ASX:GNG) for the new, state-of-the-art manufacturing facility in Kwinana Industrial Area in Western Australia (WA).
GR Engineering is a process engineering design and construction contractor headquartered in Australia, which offers services to the minerals processing and mining industries. It specialises in EPC / EPCM contracting to provide project delivery with secure cost, time, plant performance and contract completion warranties and guarantees.
GR Engineering has effectively completed the engineering design and construction of projects for a broad range of customers, including mid-tier miners, global mining houses and junior developers carrying out their first project.
GR Engineering to Support Development of Kwinana Manufacturing Facility
The letter of intent has been signed by GR Engineering and EcoGraf for procurement, engineering and construction contract for the development of a 20,000tpa battery graphite facility in Kwinana. Both the parties expect to enter into a formal contract for the manufacturing facility.
In 2019, GR Engineering provided a capital cost estimate for the construction of a new EcoGraf production facility in Kwinana, using existing land and sea transport infrastructure, power and water supplies.
The pre-tax net present value (NPV10) for the production facility was estimated at USD 141 million, with an internal rate of return of 36.6 per cent and annual EBITDA of USD 35 million, based on an upfront capital cost of USD 22.8 million for an initial 5,000tpa of production capacity. This is expected to be followed by a further capital cost of USD 49.2 million to expand production to 20,000tpa of battery graphite.
GR Engineering and EcoGraf have been working together to finalise pre-development activities for the manufacturing facility.
The Company recently updated details on the benchmarking feedstock programme that is being undertaken to ascertain the preferred feedstocks and complete binding purchase agreements.
Moreover, the Company reported the testwork results in November 2019, that confirmed the effectiveness of its purification process - EcoGraf.
Well-Positioned to Meet Buoyant Demand of Battery Graphite
The demand for battery graphite is anticipated to rise by more than 700 per cent across the globe as considerable investment continues in Europe for a shift towards clean renewable energy for vehicle as well as industrial applications.
EcoGraf is ideally positioned to meet this floating demand via its battery and natural flake graphite businesses, targeted at the production of high purity graphite for the lithium-ion battery industry.
The Company has obtained strong support from the WA Government for its first production facility, which is likely to contribute significantly to the global battery value chain. Moreover, the Company is finalising its arrangements with the WA Government's land development agency over the proposed 6.7-hectare site in Kwinana.
To recall, the Company also signed an official Participant Agreement with Perth-based FBI CRC (Future Battery Industries Cooperative Research Centre) last week.
Kwinana development project is expected to contribute considerably to WA on both economic and strategic front, providing employment to over 250 workers at the time of construction and strengthening government’s plans to place Australia as a world leader in manufacturing battery material ecologically and ethically.
EGR settled the day’s trade at $0.073 on 13 January 2020.
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