European Lithium Ltd (ASX:EUR, OTCQB:EULIF) is poised to move a step further down the path to integrated European lithium production with the impending execution of a binding joint venture (JV) agreement to build and operate a hydroxide plant in Saudi Arabia, expected before May 31, 2023.
Obeikan Investments Group, the other party involved in the JV agreement, signed a non-binding memorandum of understanding (MoU) in January this year, completing due diligence at the time with a global strategic management consulting firm.
Under the MoU, EUR and Obeikan will negotiate commercial terms for a 50:50 JV partnership to co-develop and co-operate a hydroxide plant in Saudi Arabia to support EUR’s 100%-owned Wolfsberg Lithium Project in Austria.
Significant cost savings
“Building and operating the hydroxide plant in Saudi Arabia will reduce energy costs by over 80%, provide access to a much lower corporate tax rate (20%) and provide much more attractive financing options,” European Lithium executive chair Tony Sage said.
“This will create enormous savings in operating costs and lower Capex for the Wolfsberg Project, which will greatly impact the just completed definitive feasibility study’s net present value and internal rate of return calculations.”
Watch: European Lithium highlights robust Wolfsberg DFS and ‘game-changing’ Saudi JV
Earlier this year Saudi Arabia highlighted its commitment to battery and critical minerals with the establishment of a new company, partly owned by Saudi’s sovereign wealth fund (Public Investment Fund or PIF) and state miner Ma’aden.
The new firm will invest in iron ore, copper, nickel and lithium as a non-operating partner and attempt to sign supply agreements with the companies and mines in which it invests.
Overall, Saudi Arabia has committed some US$3 billion to the endeavour, with a goal to attract mining investment worth US$170 billion by 2030, making it a highly desirable mining and production jurisdiction for battery metals.