As it aims to position itself as the industry-leading provider of high-quality ethically sourced battery-grade manganese, Element 25 Ltd (ASX:E25, OTCQX:ELMTF) continues to move closer to construction of its high-purity manganese sulphate (HPMSM) refinery in Louisiana USA.
The refinery will be designed to supply domestic HPMSM to the US electric vehicle battery industry. E25 operates the world-class 100%-owned Butcherbird Manganese Project in Western Australia and is currently undertaking activities to expand production to around 1.1Mtpa of medium-grade high silica manganese ore for use in traditional and new energy markets.
E25 is also commercialising innovative proprietary technology to produce battery-grade HPMSM for use in Electric Vehicle (EV) battery manufacturing. The company is building its first HPMSM refinery in Louisiana USA to produce raw materials for the US EV market.
“E25 aims to be a leading source of high quality, vertically integrated, traceable and ESG and IRA-compliant battery material to the global electric vehicle industry,” Element 25 managing director Justin Brown said.
“Construction of our HPMSM facility in the USA – the first of its kind there – is a key pillar to the strategic plan to support global electrification efforts.”
Currently, equipment vendors are in the process of generating basic engineering packages for specific sections of the processing plant. Concurrently, the design for the remaining portions of the processing facility is also advancing. Project engineers have formulated an initial project execution plan, a procurement strategy and other essential foundational components, all of which are undergoing a thorough review process.
To ensure the project remains on track both financially and temporally, project controls are being established. These controls are designed to provide robust management of the project's cost and schedule.
3D engineering model development for Louisiana HPMSM refinery.
Project schedule and site selection
The start of construction and commissioning for E25's project remains under strategic review, with a comprehensive project schedule already in place. This schedule spans engineering, permitting, project financing and construction phases.
The green light for construction and commissioning will hinge on the E25 Board of Directors' Final Investment Decision (FID), which is looking at finalisation of binding terms for the project site and the conclusion of financing activities.
The project's development timeline is projected to take around 80 weeks, although efforts are underway to explore potential reductions in the construction period. In parallel, discussions are ongoing with the owners of the preferred project site.
E25 aims to negotiate a deal that would integrate land acquisition, sulphuric acid supply, and ancillary services into a comprehensive commercial agreement.
The procurement of sulphuric acid, a critical reagent for the Element 25 High Purity Manganese Sulphate Monohydrate (HPMSM) production process, is a pivotal factor in the site selection strategy, demanding a secure and competitively priced supply. Other key considerations shaping the decision include logistics for materials transport and site-specific permitting requirements.
Pending the closure of these commercial discussions, site-specific engineering efforts are momentarily on hold, emphasising the project's methodical approach to securing a viable and strategic project site.
Permits required
To move things forward, E25 needs to have two crucial permits in place.
The first is an air permit, which is crucial for the initiation of construction activities at any facility that emits or potentially emits air contaminants, including particulate matter, dust, fumes, gas, mist, smoke or vapour. Element 25 has undertaken a comprehensive assessment of the expected emissions from its High Purity Manganese Sulphate Monohydrate (HPMSM) refinery, submitting the findings and necessary documentation to the Louisiana Department of Environmental Quality (LDEQ).
A draft air permit has been issued by LDEQ, with feedback provided to the regulatory body. The permit process is advancing towards a critical public meeting, scheduled for April 18, 2024 at a local community centre near the proposed site. Following consultation, the final air permit is expected to be granted in May 2024.
In addition to the air permit, the start of construction is contingent on receiving Nationwide Permit 39 from the US Army Corps of Engineers (USACE). This permit facilitates minor impacts on wetlands/waters for industrial projects. Element 25 submitted the application for Nationwide Permit 39 in November 2023, with issuance projected around the same timeline as the air permit.
Logistics support
The logistics and marketing team is in discussions with Associated Terminals, a key stevedore and terminal operator on the Lower Mississippi River, for manganese ore handling and potential storage solutions aimed at supporting the upcoming HPMSM refinery.
Associated Terminals manages operations at multiple locations along the river and handles 25 to 30 million tons of cargo annually. It could offer strategic storage facilities, reducing the need for extensive storage at the refinery and enhancing ore shipment flexibility. Negotiations aim to secure competitive terms for these services. Additionally, the design for reagent offloading facilities is underway, with most reagents, except sulphuric acid, planned to be trucked from local Baton Rouge suppliers.
Project financing
E25 has secured binding off-take and funding agreements with General Motors (NYSE:GM) LLC and Stellantis N.V., ensuring a total of U$115 million in financing for the Louisiana HPMSM project. All milestones related to the Stellantis agreement have been met on schedule, while two milestones under the GM agreement concerning the site lease signing and the final project budget and plan are under renegotiation to align with the project's development stage.
Efforts to finance the remaining construction costs are ongoing, with Jett Capital Advisors guiding the process. Financing strategies under consideration include bank debt from premier lenders, joint venture partnerships, project-level equity investments, royalty and streaming deals, and government-funded loans or grants.
Several potential financiers have engaged in due diligence, reviewing comprehensive financial and technical project details, with one group visiting the Louisiana site. The company is currently evaluating multiple term sheets and proposals with its advisors, aiming to complement the initial U$115 million with additional funding necessary to complete the project.
Further to this the US Department of Energy's Advanced Technology Vehicles Manufacturing (ATVM) Loan Program, under the Bipartisan Infrastructure Law, offers loans for manufacturing advanced technology vehicle components and EV charging infrastructure.
Element 25 (Louisiana) LLC is seeking funding through this program, currently in the initial intake phase, with potential advancement to due diligence. The ATVM supports onshoring and reshoring of critical material production for clean energy technologies and advanced vehicles.
In January 2024, the financing team of the project submitted a concept paper for the Bipartisan Infrastructure Law: Battery Materials Processing and Battery Manufacturing Grants, tapping into a US$3 billion (AU$4.56) fund over five years. Following an encouraging response, the team is now preparing a comprehensive application due by March 19 2024, although receipt of encouragement does not ensure final selection.
The project has also benefited from a substantial incentive package valued at approximately US$57 million from the Louisiana State Government, previously disclosed to the market.
Additionally, the Element 25 HPMSM project qualifies for the Inflation Reduction Act's 45(X) production tax credit, offering a 10% credit on eligible operating costs for domestic manufacturing of critical minerals at the E25 facility. Updates on the grant application's progress will be communicated as significant developments occur.
The E25 Process
Element 25 is pioneering a processing technique for transforming Butcherbird manganese into high purity manganese sulfate monohydrate (HPMSM), essential for lithium-ion batteries.
This unique method minimises energy use and waste, claiming the lowest carbon footprint for HPMSM production worldwide. The company is establishing a Louisiana facility to supply up to 135Kt annually of HPMSM to U.S. EV markets, promoting ethical, traceable, and transparent sourcing.