HomeBattery metalsGlobal decarbonisation: A strategic contributor in the making

Global decarbonisation: A strategic contributor in the making

Decarbonisation – a priority that is topping the global world’s agenda – starts with the mining industry.

Renewable energy, battery storage and electric vehicles hold the key to delivering on carbon-neutral objectives and this means ensuring sufficient quantities of green metal supply, including graphite – at times the least talked about battery material but whose unique properties make it one of the most important minerals in the world – to produce these planet-saving technologies, writes LAURA CORNISH.

Africa’s Madagascar will be home to the world’s next producing graphite mine (outside of China).

100% owned by NextSource Materials, the Molo graphite project, situated in Fotadrevo, is well advanced in construction and is set to produce first graphite in July 2022.

While the company is initially targeting 17 000 tpa of graphite from Molo, this represents just the start of what is planned to be a substantially larger operation.

It also represents the start of what will be a larger mining business, with a downstream ‘mine-to-the battery’ anode production strategy, and potential acquisition of additional assets and projects within the green metals sphere.

“Our business, our primary project focus and our value-added strategy is now being accelerated and is in lock with the vision and growth objectives of our strategic investor, Vision Blue Resources,” starts Brent Nykoliation, executive vice president of NextSource Materials.

Vision Blue Resources is a battery commodity/resource-focused private investment company founded by Sir Mick Davis in 2020 to capture opportunities in the battery and technology minerals arena. Davis, who became Chairman of NextSource in March 2021, represents true excellence for the business – he is the former CEO of Xstrata, former CFO of Billiton and the chairman of Billiton Coal.

He is also the former founder and partner of X2Resources, a US$5.6 billion investment fund. Through his newly established company Vision Blue Resources, he has to date invested $29.5 million into NextSource and owns a 48% partially diluted ownership of the company. A such, the Molo project’s construction requirements are fully funded to production.

“Vision Blue was created to assemble a portfolio of strategically significant investments in high quality, responsibly managed and proven battery material mining assets. We view Molo as one of the highest quality graphite assets globally which is well positioned for significant upside in growth and value.

“Our intent is to help NextSource become a major battery materials producer and our initial investment is just the first stage in unlocking its potential,” says Davis.

Understanding the Molo project – and its potential

Molo’s 2019 feasibility study outlines a phased development approach with Phase 1 producing 17 000 tpa over the first two years of production and Phase 2 producing a total of 45 000 tpa by the third year.

Over the modelled life of mine (30 years), the production plant will have a pre-tax internal rate of return of 43.1% and a post-tax IRR of 36.2%. The pre-tax NPV at 8% discount rate will be $237.1 million and the post-tax NPV $184.3 million.

The capital mine cost for Phase 1 totals $25 million with Phase 2 capital outlay requiring an additional $39.1 million, for a total project cost of $60.1 million

Both phases will utilise NextSource’s unique, fully modular build approach, which greatly reduces build time and associated costs in relation to conventional mine construction. The company announced in June that it initiated a technical study for a Phase 2 production capacity at a minimum of 150 000 tpa.

This is a significant increase from the current Phase 2 capacity of only 45,000 tpa and was determined after recent discussions with their offtake partners and their partnership with key processors in the Tesla supply chain for the construction of a battery anode facility to produce spheronized and purified graphite for EV batteries.

“One of the key aspects to understand and appreciate about Molo, beyond its scalability potential (substantial considering the deposit is located within a 300-line km trend of continuous graphite on surface), is the quality of our graphite,” Nykoliation states.

The mine’s graphite concentrate can achieve 98% carbon purity with simple flotation alone, has excellent thermal expansion, can be easily upgraded to 99.995% battery grade purity and contains no deleterious substances.

This has been independently verified by end-users for all major demand markets for natural flake graphite, namely refractories, anode material for lithium-ion batteries, specialty graphite foils and graphene ink applications.

The graphite concentrate also has excellent flake size distribution that is well above the global average, with 46.4 % being classified as the premium-priced large (+80 mesh), extra- large (+65 mesh) and jumbo (+48 mesh) sized flake.

Specifically, 23.6% of the graphite concentrate is the jumbo size (+48 mesh) that is required exclusively for specialty graphite foils, where they are used in a myriad of applications in the chemical sealant, fire-retardant, automotive and consumer electronics industries.

To best maximise on the value associated with such high-quality graphite, NextSource successfully registered Molo SuperFlake as a trademark in Canada.

The successful registration of this trademark means that NextSource has the exclusive right to brand all of its natural flake graphite sold in Canada as Molo SuperFlake from Molo when it enters production and begins exporting high-quality flake graphite.

A closer examination of Molo’s production targets includes:

PHASE 1: Production of 17 000 tpa

The first phase of production will consist of a fully operational and sustainable graphite mine with a permanent processing plant capable of processing 240 000 tpa of ore and producing approximately 17 000 tpa of high-quality SuperFlake graphite concentrate.

PHASE 2: Production expansion to 45 000 tpa in Year 3 (a capacity that is now being considered at a minimum 150,000 tpa)

Phase 2 will ramp up production 720 000 tpa of processed ore in the third year to accommodate additional sales, resulting in a total of 45 000 tpa of SuperFlake concentrate being produced for a mine life of 30 years.

The costing for Phase 2 is based on the addition of two modules of the beneficiation plant with a proportional increase in mining and infrastructure costs.

Construction update

Despite the challenges associated with COVID-19, NextSource has avoided any delays thus far by the fact that the modular plant is being built offshore, which has de-risked the construction process.  Molo’s construction is tracking according to time and budget with overall project progress now at the 50% completion mark. Construction will be completed by November, followed by factory assurance testing. Once complete and approved by the process engineers, the plant will be disassembled and readied for transport to Madagascar.

“Our modular plant provides us with a significant advantage versus other competing projects, on both a first-mover and barrier to entry advantage. With a mere nine month build time due to the modular build approach, the entire plant, which comprises 42 modules, can be reassembled on site within a 45-day timeframe.” Nykoliation highlights.

All necessary company personnel have been mobilised to Madagascar to begin preparations for site works, which are on schedule to commence imminently. Plant equipment is on track to be delivered to site in Q1, 2022, with plant equipment module installation at site on schedule to begin in Q1/Q2, 2022.

Solid offtake agreements with tier one partners

Another area that perhaps positions NextSource in a ‘league of its own’ – relative to other junior peers in Africa – is its partnerships for offtake. In April this year the company finalised a binding agreement to construct and operate a value-added, battery anode facility (BAF) to produce spheronised and purified graphite required in lithium-ion batteries for EV and hybrid EV applications.

The partnership is exclusive to NextSource and pairs the company with two well-established and leading companies that process and supply SPG to leading Japanese anode and battery makers, who in turn supply the Tesla supply chain and other major automotive companies.

This three-way partnership provides NextSource with a complete, turnkey anode facility that is an exact duplicate of the facility that is currently processing value-added spheronised and purified graphite for lithium-ion batteries by one of the current suppliers to Tesla and other international automotive companies.

Commissioning of the BAF is targeted for Q4, 2022 and will be located proximal to key demand markets for graphite anode material. South Africa, Europe and North America are the jurisdictions currently being considered for the location of the facility.

Beyond this, August saw the company secure a long-term binding commercial agreement with thyssenkrupp Materials Trading for the purchase of 30 000 tpa of SuperFlake graphite concentrate from Molo. The term of the agreement is 10 years with an automatic five-year extension.

As Phase 1 initial production will be approximately 17 000 tpa, the requested offtake purchase volumes by thyssenkrupp will be phased, starting with a minimum of 7 300 tpa during Phase 1 initial production and up to 30 000 tpa to be available in Phase 2, which is targeted production by Q2, 2024

The greater clean energy strategy

“NextSource’s strategy is to be a green materials company, and we will be assessing emerging opportunities to accelerate expansion of our organic growth strategy through the potential acquisition and development of additional metals and mineral assets expected to play a vital role in associated clean energy technologies,” Nykoliation affirms.

NextSource’s current portfolio includes a large-scale vanadium resource just 11 km from the Molo and currently undergoing a metallurgical optimisation study. Vanadium is another metal with demand underpinned for the traditional steel making industry but is now strongly aligned with expected demand for vanadium redox batteries – a leading technology for large-scale energy storage systems that not only requires vanadium as a raw material in the battery, but flake graphite as well. This second strategic and critical mineral NextSource has in Madagascar provides an ideal platform to expand further into the critical mineral supply chain.

“Together with Vision Blue, we have recognised the potential for increased collaboration and mutual benefit across the asset evaluation, investment and development cycle. The onset of Molo production is just the start for NextSource Materials,” Nykoliation concludes.