Magnis Energy Technologies has signed a binding engineering, procurement and construction contract with China-based construction contractor Metallurgical Corporation of China, to provide a turn-key solution for a 240 000 tpa graphite production facility at the company’s Nachu graphite project in Tanzania.
Tanzania – Metallurgical Corporation of China, the world’s largest metallurgical construction contractor and operation service provider with over $28 billion in annual revenue, will provide a fixed price turn-key solution to produce high-purity graphite products and is inclusive of all items and inventory, including but not limited to the processing plant, infrastructure including roads, power, workers camps and storage facilities.
Development of EPC Contract
The execution of this EPC contract is the culmination of work undertaken over the last 12 months by projects teams from both Magnis and MCC, which involved the MCC team spending a month in Tanzania and a week in Australia, in addition to multiple trips to China by the Magnis team.
The previously completed bankable feasibility study, including front-end engineering and design (FEED) for the Nachu project, formed the basis of this work.
MCC developed the EPC offer by combining experts from leading institutes for graphite production, with contractors experienced in delivery of African projects.
During field trips, the MCC project team conducted visits to site and local suppliers, in addition to the laboratory where Magnis’ graphite process has been developed. MCC has also engaged leading Chinese equipment vendors in the development of its procurement and pricing strategies for this project.
Fixed Price and Financing Financing
As per the EPC, the fixed price for the turn-key solutions is US$277 million, which is the complete cost for a 240 000 tpa plant, including savings derived from the Special Economic Processing Zone license provided to the project.
The execution of the EPC contract is an important prerequisite in the application for project financing support from China Export Credit Agency. Funding applications and negotiations with the above agency have already commenced, and concurrently, Magnis and MCC are continuing further negotiations regarding the closure of residual project funding amounts, with the objective of minimising the equity portion required.
Initial meetings between all parties have targeted financing of no less than 80% in debt or delayed payments, and to date this target seems achievable with final outcomes expected in H1 2020.
“The Nachu project is very unique and is one of the most impressive graphite projects I have seen to date. In particular, our team has been very impressed with the high purity products it can produce, minus any purification. We believe we can assist with the funding of at least 80% in debt funding or delayed payments and we look forward to working with Magnis in achieving a world class operating graphite mine,” says Vice President of MCC International, Wang Zhou.
According to Magnis MD Marc Vogts, the execution of the EPC contract with MCC, which is contingent on MCC organising at least 80% of the funding, demonstrates the quality of the project along with the significant progress made at Nachu this year, which is shovel ready and Tanzania’s most advanced graphite project. With the ability to produce 99.95% graphite products via mechanical processes only, Magnis is in a unique position to become a leader in the production of anode materials for the rapidly growing battery market.