Saudi plant is ‘wake-up call’ for Quebec, France: Northern Graphite CEO 

Northern Graphite’s (TSX-V: NGC; US-OTC: NGPHF) decision to build a $200-million (C$144-million) battery material plant in Saudi Arabia should serve as a warning for governments in Canada and France, where the miner has been mulling similar projects, CEO Hugues Jacquemin says. 

Ottawa-based Northern last month agreed with Saudi Arabian conglomerate Al Obeikan Group for Investment to jointly build and operate the facility after the miner restarts a dormant mine in Namibia. Construction is expected to begin in the second half after a final feasibility study has been completed, with production set for 2028. 

Until announcing the Saudi commitment, North America’s only producer of natural graphite had been developing plans to build battery material facilities in Baie-Comeau, Que. and France. Those two projects will now take a backseat to the Saudi venture, Jacquemin said. 

“Certainly it’s a wake-up call for those two regions to come up with incentives that would allow us to move forward,” Jacquemin told The Northern Miner in an interview after announcing the Saudi Arabia venture. “At the end of the day, it’s a question of resource and money. The graphite is there. It’s in the ground. If there is a will, there is a way.” 

Power allocation

Northern has previously said operations in Baie-Comeau could start as soon as 2027. Capacity would initially be about 20,000 tonnes a year, with potential for expansion. Securing power from Hydro-Québec, the province’s electricity producer, will be crucial for the fate of the proposed plant. 

“We’re still awaiting allocation of power in Quebec and we’re still waiting to see what kind of support the government is willing to give us,” Jacquemin said. “Hopefully this news will put more pressure on them.” 

Located in the port city of Yanbu, on the Red Sea coast, Northern’s Saudi plant will have an initial capacity of 25,000 tonnes, Northern said Jan. 14. Supply will come from the Okanjande mine in Namibia, where Northern expects to start producing graphite concentrate in 2028. 

“It will be a model of what we want to do. Then we can copy-paste what we do here elsewhere,” Jacquemin said of the Saudi factory. “We will continue to pursue the projects we have in Europe and North America, but this one will definitely move faster.” 

Northern’s ambition “is always to be first to market,” the CEO added. “By doing this we believe we will be first to market with a fully integrated supply chain between Namibia and Saudi Arabia.” 

Debt funding

Obeikan will own 51% of the joint venture, compared with Northern’s 49% stake, and spearhead efforts to secure local debt funding required to finance the plant’s construction, development and commissioning. 

Output could increase over time to meet growing global demand for graphite anode materials sourced outside of China, Northern said. Anode material is the largest component in the lithium-ion batteries that power electric vehicles. 

Negotiations with unidentified global battery makers over a long-term, 25,000-tonne-per-year offtake agreement are well advanced, Northern said. The joint venture will commit to buying up to 50,000 tonnes per year of graphite concentrate from Okanjande.  

Restarting Okanjande should cost about $35 million, Jacquemin said. A preliminary economic assessment published in 2023 contemplates annual output of 31,000 tonnes for the mine over a 10-year life.  

Future minerals 

Jacquemin says he was introduced to Obeikan officials after a friend of his met company representatives last year at the Future Minerals Forum in Riyadh. Talks intensified after the Saudi group expressed an interest in backing a graphite processing plant in the country. 

“Saudi Arabia was never really on our radar as a location for us to build this facility,” Jacquemin said. “As we started talking to Obeikan and looking at the location, the cost structure and the kind of incentives the Saudi government is willing to put on the table, it started to make a lot of sense.” 

Saudi Arabia’s investment is consistent with Vision 2030 – a strategic plan announced in 2016 by Crown Prince Mohammed bin Salman to transform the kingdom’s economy and society by reducing its dependency on oil. Key areas of focus include advanced manufacturing and energy transition technologies. 

“Our partnership with Northern is fully aligned with the Kingdom’s ambition to lead in advanced materials and clean energy supply chains,” Obeikan CEO Abdallah Obeikan said in a statement. “This partnership will combine Northern’s expertise with the industrial knowledge of Obeikan and the strength of Saudi Arabia.” 

Ambitious goals

Saudi Arabia “is investing a lot in the electrification of the country. They clearly have very ambitious goals to make batteries here,” Jacquemin said. 

Since the new plant is regarded by Saudi Arabia to be a strategic project, its backers will have access to funding from the government-owned Saudi Industrial Development Fund, or SIDF, the CEO added.  

“SIDF will fund between 50-75% of this project, and there are other incentives. It allows us to move very fast. Their timeline for permitting is very short.” 

Saudi Arabia is well positioned geopolitically “because they have agreements with both the West and the East,” Jacquemin also said. “It can be a platform to supply the global market with a lot of different minerals, and graphite is definitely on their list. By being here we can supply the Middle East, but also Europe and North America.”