- BlackEarth Minerals and Metachem have completed an enormous amount of work to advance the development of their joint venture.
- An MOU was signed between the two companies in June to set up a proposed JV company, which will supply expandable graphite product.
- Demand for expandable graphite is expected to grow rapidly due to projected supply shortages globally.
- Production is expected to start in Q3 2022.
Critical commodity developer BlackEarth Minerals NL (ASX:BEM) and Metachem Manufacturing Company Pvt. Ltd. have gained ground towards signing legally binding agreements for their proposed joint venture (JV).
The two companies signed a memorandum of understanding in June this year to jointly produce expandable graphite for supply into the growing European and US markets. Since then, they have been undertaking significant work to finalise and sign binding JV agreements in the short term.
The proposed JV partner, Metachem, leads in the production and supply of world-class expandable graphite.
Demand for the expandable graphite product under the proposed JV is expected to grow rapidly to meet projected worldwide supply shortages.
Source: BEM Presentation, dated 2 September 2021
Recently, BlackEarth secured a binding commitment from Austria-based global graphite downstream processing leader Grafitbergbau, for the purchase of up to 2,500mt per annum of the proposed JV’s expandable graphite product.
Key developments towards the Binding JV Agreements
Several meetings were held between senior executives of BlackEarth and Metachem over the past couple of months to discuss a range of development matters such as site selection, graphite concentrate supplies, development plans, and concluding the terms of the proposed binding JV agreements.
Anticipating finalisation and execution of the binding JV Agreements shortly, significant work has been completed concerning preparing Stage 1 plant development plan.
While many potential development sites have been selected, the Company indicated that its final decision on the preferred location is pending.
Notably, these potential development sites, situated within Special Economic Zones (SEZs) in India, can provide developers with significant tax, power, and other economic concessions.
Production expected in Q3 2022
BlackEarth has reported that all material terms to the Binding JV agreements are approaching the final stage. Signing is anticipated to occur in the short term after the incorporation of a JV company.
The stage 1 plan of the joint venture proposes to commence plant development immediately upon executing the binding JV agreements and incorporating and capitalising the JV company.
The production is scheduled to begin in the third quarter of 2022.
Exciting development meets strategic business goals
BlackEarth Managing Director Tom Revy highlighted that besides progressing toward agreement on the terms of binding JV agreements, they continued developing production plans and assessing proposed sites and supply arrangements with marketing and supply partners in Europe.
“This is potentially a very significant development in the growth of our Company, and we’ve undertaken a lot of work toward concluding binding JV agreements that suit our strategic short and long term business goals. We believe the terms that should be concluded offer a very attractive outcome and we look forward to updating the market with the full details of this in the short term,” Revy added.
BEM stock was trading at AU$0.130 on 13 October 2021 (AEST 12:49 PM), up 4% from its last closing price.