Madagascar graphite mine developer BlackEarth Minerals (ASX: BEM) has signed a supply and marketing deal with a German company which has Volkswagen, Mercedes and Ford as some of its major clients.
BlackEarth is now working on its bankable feasibility study for the Maniry graphite project in southern Madagascar which is expected to be completed this year.
The agreement with Luxcarbon GmbH, based in Essen, provides that BlackEarth will sell up to 25,000tpa of downstream products into the European market to meet the growing demand for electric vehicle batteries.
This deal follows a memorandum of understanding last week with US company Urbix Inc, whereby the American company will take graphite concentrate for its downstream processing facility in the US.
Large processing plant at Essen
As for the deal announced today, Luxcarbon will also provide advisory services to BlackEarth concerning the production of downstream products.
Luxcarbon has an “extensive” processing plant at Essen that can supply a range of natural graphite related products as well as high value, downstream graphite products.
BlackEarth managing director Tom Revy said the agreement with the German company provides great outcomes for the company.
“Firstly, it enables us to secure a supply of world class graphite concentrate that can be supplied to Urbix’s operations in the US and also our own downstream processing facility while we complete the development of our plants in Australia and Madagascar.”
“Secondly, Luxcarbon are leaders in the supply and understanding of downstream graphite products and this will assist us greatly,” he added.
EV sales urging in Europe
The announcement says that both BlackEarth and Luxcarbon are excited by the prospects for further growth in the EV market in Europe and that region’s continued commitment to battery and alternative energies.
EV sales growth increased by 44% in 2019.
Also, future sales could be boosted by a new European Union emissions standard that requires that all vehicles sold in 2021 meet that new standard.
Germany and the Netherlands have been contributing around half the growth between them in EV sales — in 2019 German sales rose by 55% and Dutch auto sales yards notched up a 144% sales gain that year.
BlackEarth’s proposed Maniry operation is expected to have a 10 year mine life and projected capital outlays are US$41 million (A$53 million) for stage one production (500,000tpa) and another US$29 million (A$37.5 million) to take output from the mine to 1Mtpa.