EV Metals Group (EVM), the Australian company building a battery materials complex in Saudi Arabia, has inked a major lithium deal with compatriot Zenith Minerals (ZNC) to secure upstream resources.

The companies will form a 60-40 joint venture to develop the two lithium projects in Western Australia 100%-owned by ZNC – Split Rocks and Waratah Well. The transaction would give EVM access to 60% of the lithium exploration rights in these projects, with the remaining 40% to be retained by ZNC. It excludes rights for non-EV metals. 

Under the agreement, EVM will fund completion of a feasibility study for the projects within 24 months and cover all expenditure to a decision to mine. After that, the JV partners would split spending according to their ownership.

EVM must arrange all financing for the development, construction and commissioning of any future mines, with ZNC later repaying its proportionate share. The companies estimate EVM will spend AUD 7 million ($5.11m) in exploration activities in the next two years, while also subscribing for 200 million ordinary shares of ZNC at a cost of $0.30 per share.

Zenith will use the funds to source new opportunities in lithium, as well as gold and base metals development expense. Through this deal, the company plans to refocus on EV battery materials, demerging its gold and other non-EV metal projects into one or more new companies to be listed on the Australian Stock Exchange (ASX).

EVM’s ceo Michael Naylor told Kallanish the lithium rights targeted by the company through its new subsidiary Australian Lithium Alliance, in the highly-prolific Western Australian region, offer the company the feedstock it needs to run its planned complex in the Yanbu Industrial City, Saudi Arabia.

“The battery chemical project is being developed as a midstream/downstream hub for the diversification and geopolitical alignment of global supply chains,” he explains. “Australian spodumene concentrate will be processed into lithium hydroxide monohydrate (LHM) in the kingdom [of Saudi Arabia]… Europe and North America are seeking secure and transparent long-term supply of critical raw materials, high-purity chemicals and cathode materials.”

The complex is designed to produce 100,000 tonnes/year of LHM, with initial production requiring around 660,000 t/y of spodumene concentrate (SC6). Construction of the first two trains is slated for Q1 2023, with the other two to follow. Production is targeted in late 2024, ramping up to full capacity around 2026.

Commenting on the new JV, Zenith’s ceo Michael Clifford added “the arrangement goes much deeper than just the joint venture on these two existing Zenith projects … with the parties also agreeing to jointly assess new lithium/EV-metal opportunities throughout Australia where commercially appropriate to do so.”