Rock Tech estimates capex reduction for Guben converter

Executive Summary

• Rock Tech Lithium Inc. announced an estimated €50 million reduction in capital expenditures (capex) for its Guben lithium converter project, lowering the total estimated cost from €730 million to €680 million (a 6.9% decrease).
• The company also reported a modeled 23% reduction in operating expenditures (opex), dropping from approximately €5,033 to €3,878 per tonne of lithium hydroxide, significantly improving the project's economic viability and competitiveness.
• Rock Tech signed a non-binding Memorandum of Understanding (MOU) with Sichuan Calciner Technology (SCT) for potential engineering and process optimization collaboration, while simultaneously terminating a previously contemplated joint venture with Arcore AG to focus resources on the Guben project.

Key Details

• Capex Reduction: Net reduction of approximately €50 million (from €730M to €680M).
• Capex Breakdown of Savings:
  • Optimized Plant Design: Savings of ~€22 million (reduced from €62M to ~€40M) via adjustments to packaging, facade, emissions, and piping.
  • Adjusted Storage Capacities: Savings of €7 million (reduced from €35M to €28M) due to new logistics concepts.
  • Process Optimizations: Savings of €14 million (reduced from €88M to €74M) through compatible process technology changes.
  • Updated Supplier Estimates: Savings of ~€16 million (reduced from €597M to €581M) via revised procurement and expanded sourcing.
  • Contingency: Savings of €3 million (reduced from €60M to €57M).
  • Offsetting Costs: Gross savings of ~€62M were partially offset by ~€12M in increased owner costs, resulting in the net €50M reduction.
• Opex Reduction: Modeled reduction of 23%, lowering production costs from ~€5,033/tonne to ~€3,878/tonne of lithium hydroxide.
• MOU with SCT:
  • Non-binding agreement with Sichuan Calciner Technology (SCT) for engineering and process optimization.
  • SCT is a global expert in lithium refining plants, having designed/built over 60 lithium converter trains globally.
  • Potential benefits include access to SCT’s expertise in pyro-metallurgy, plant design, and sourcing to further optimize investment costs.
• Merger/JV Update:
  • Rock Tech intends to cease activities in Bosnia and Herzegovina.
  • Terminated the previously contemplated joint venture with Arcore AG for lithium-bearing ore extraction.
  • Strategic pivot to prioritize capital and management attention on the Guben lithium converter and other strategic initiatives.
• Project Specifications (Guben Converter):
  • Location: Guben, Brandenburg, Germany (German-Polish border).
  • Capacity: 24,000 tonnes of battery-grade lithium hydroxide annually.
  • Equivalent Battery Capacity: ~30 GWh (sufficient for ~500,000 EVs per year).
  • Technology: Advanced crystallization technologies supplied by GEA Group AG.
  • EPCM Partner: Worley.
  • Status: Fully permitted; recognized as a strategic project under the EU Critical Raw Materials Act.
  • Jobs: Expected to create ~200 jobs.

Notable Quotes

• Henrik Wende, Managing Director of Rock Tech Guben GmbH: "The combination of modelled operating cost reductions and estimated capital cost savings will fundamentally change the business case for Guben... To complete the financing of the project, these optimizations are decisive factors that we expect to significantly improve our position."
• Mirco Wojnarowicz, CEO of Rock Tech: "Should the partnership advance on mutually agreeable terms, the company will gain access to SCT's comprehensive expertise in lithium processing... Particularly in the pyro-metallurgical area, we see further potential for optimizing our investment costs through collaboration with SCT in the area of plant design and sourcing."
• Jeremy Chang, CEO of SCT: "SCT can bring expertise and experience in the industry to improve the safety, reliability and economics of the plant. This collaboration reflects the growing global momentum in decarbonization and electrification and could help establish battery and electric vehicles industry in Germany."