Northern Graphite signs $200M Saudi BAM JV term sheet

Executive Summary

• Northern Graphite Corp. and Al Obeikan Group for Investment Company have signed a term sheet to establish a joint venture (JVCo) to develop and operate a large-scale battery anode material (BAM) facility in Yanbu Industrial City, Kingdom of Saudi Arabia.
• The JVCo will be 51% owned by Al Obeikan and 49% by Northern Graphite, with an initial Phase I production capacity of 25,000 tonnes per year (tpy) forecast for 2028, scalable to meet global demand.
• The project involves a long-term offtake agreement for up to 50,000 tpy of graphite concentrate from Northern’s Okanjande mine in Namibia and includes a royalty on net sales for Northern, accelerating the restart of the Okanjande mine.

Key Details

• Transaction Structure: Joint Venture Company (JVCo) majority-owned (51%) by Al Obeikan Group and minority-owned (49%) by Northern Graphite.
• Project Location: Yanbu Industrial City, Kingdom of Saudi Arabia, a strategic hub on the Red Sea with access to European, North American, and Middle Eastern markets.
• Capital Investment: Approximately $200 million (U.S.) for the BAM facility.
• Financing: Project debt financing to be sourced from Saudi government finance agencies, local, and global commercial banks. Obeikan is leading the organization of local debt funding. Remaining funding provided as equity by partners and jointly through commercial banks.
• Production Capacity: Phase I capacity of 25,000 tpy forecast for 2028, with scalable expansion capabilities.
• Of Take Agreements:
  • Advanced discussions underway with global battery manufacturers for long-term offtake of the initial 25,000 tpy of BAM production.
  • JVCo to enter a long-term offtake agreement to purchase up to 50,000 tpy of graphite concentrate from Northern’s Okanjande mine in Namibia.
• Royalty Structure: Northern will receive a royalty on net sales of battery anode materials in addition to its direct ownership interest in JVCo, recognizing its role in technology development, validation, and customer qualification.
• Timeline:
  • Term sheet signed: January 14.
  • Construction start: Expected 2026.
  • First-phase production: Forecast 2028.
  • Final Feasibility Study (FFS) completion: Intended by June 30, 2026.
  • Definitive agreements and incorporation: Intended by Q4 2026.
• Okanjande Mine (Namibia): The JV materially accelerates the restart and potential expansion of the Okanjande mine, which has been on care and maintenance since 2018. A Preliminary Economic Assessment (PEA) filed Aug 28, 2023, contemplated 31,000 tpy over a 10-year life; a new technical report will evaluate higher production rates for JVCo requirements.
• Strategic Alignment: Project aligns with Saudi Arabia's Vision 2030, focusing on advanced manufacturing and energy transition. It aims to provide a secure, traceable, non-Chinese supply chain for lithium-ion battery anode materials.
• Market Context: Cites SNE Research data projecting lithium-ion battery cell manufacturing capacity to reach 4,527 GWh by 2035, with graphite retaining over 91% anode share through 2040.

Notable Quotes

• "This joint venture represents a defining step in Northern's evolution from a mining company into a fully integrated, global battery anode material producer... gaining scale, financing strength, and access to one of the world's most strategically important industrial hubs, while accelerating the restart of our Okanjande mine in Namibia and advancing our broader mine-to-market strategy." — Hugues Jacquemin, CEO, Northern Graphite
• "Our partnership with Northern is fully aligned with the Kingdom's ambition to lead in advanced materials and clean energy supply chains... Together, we intend to establish a world-class BAM production hub in Yanbu that serves global battery manufacturers while strengthening the resilience of international supply chains." — Abdallah Obeikan, CEO, Al Obeikan Group for Investment Company