Aspiring lithium-ion battery cell manufacturer Magnis Energy Technologies (ASX: MNS) has awarded a $406 million engineering, procurement and construction contract to the world’s largest metallurgical construction group for the provision of a turnkey production facility at the Nachu graphite project in Tanzania.
Metallurgical Corporation of China (MCC) won the contract following 12 months preparatory work based on Nachu’s bankable feasibility study including front-end engineering and design.
The EPC contract provides a fixed price, turnkey solution to produce 99.5% purity graphite anode products at a 240,000 tonnes per annum production facility using Nachu ore and is inclusive of all items and inventory.
A team from MCC spent four weeks onsite in Tanzania evaluating the project, while a team from Magnis made multiple trips to China to inspect MCC’s facilities during the year.
MCC developed the EPC offer by combining experts from leading institutes for graphite production, with contractors experienced in the delivery of African projects.
It also engaged leading Chinese equipment vendors in the development of its procurement and pricing strategies.
The EPC contract is an important pre-requisite for project financing support from China Export Credit Agency, for which the application and negotiation process has already begun.
In parallel to this, Magnis and MCC are continuing further negotiations regarding the closure of residual project funding amounts with the objective of minimising the equity portion required.
The execution of the EPC contract is contingent on MCC organising financing of no less than 80% in debt or delayed payments.
Advanced graphite project
Magnis managing director Marc Vogts said the contract will help realise the company’s objective of producing high-purity graphite minus any purification.
“[This milestone] demonstrates the quality of Nachu, which is shovel ready and Tanzania’s most advanced graphite project,” he said.
“With the ability to produce 99.95% graphite purity via mechanical processes only, we are in a unique position to become a leader in the production of anode materials for the rapidly-growing battery market.”
With assets of over $73 billion and annual revenues exceeding $41 billion, MCC is the world’s largest metallurgical contractor and operation service provider and one of China’s largest steel structure producers.
The group employs over 130,000 staff and has extensive experience in the design, engineering, construction and operation of processing plants.
At midday, shares in Magnis Energy Technologies were trading 8.25% higher at $0.105.