Korean firm to build graphite plant in Tanzania

South Korean engineering firm, POSCO, may build and help arrange financing for a graphite project in Tanzania being developed by Magnis Resources, as the Australian explorer races to start production from the east African site by 2017.

Demand for graphite is expected to soar as it is a major ingredient in lithium-ion batteries for hybrid vehicles and wind and solar energy storage, with appetite for greener transport and energy booming. 

Magnis, said yesterday it had signed a memorandum of understanding that could see POSCO Engineering and Construction, arrange debt from lenders it has ties with the $210 million Nachu project, as well as coming up with a fixed-price bid by mid-2016 to build the mine and processing plant.

“The quality of the graphite at Nachu, is the best in the world and with the huge demand in the battery market, we are excited to be involved with Magnis,” POSCO E&C mining plant business group director Peter Lim said, in a statement put out by Magnis.

Electric car maker Tesla Motors Inc, is looking for graphite supply for a factory it is building in Nevada which it says will make more lithium ion batteries annually by 2020 than were produced globally in 2013.

Magnis is in talks to line up debt and construction proposals from a range of sources in order to get the most competitive offers and the quickest development plan, said its chairman, Frank Poullas.

The plan with POSCO E&C, is similar to one that Magnis lined up with state-owned China National Nonmetallic Minerals Industrial Corp (SINOMA) for $150 million in potential project finance and construction services.

SINOMA is one of two Chinese companies that have agreed to buy total 180,000 tonnes a year, or about 70 percent, of the planned output from Nachu. Supply agreements like those are key to lining up financing.

“The remaining off take that we plan to sign will be with western groups, just to spread that risk,” Poullas. “What we’ve seen with a lot of parties looking, when it comes to financing, is they want western offtakes,” Poullas declined to comment on whether Magnis was in talks to supply Tesla.
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Source: Daily News, reported from Dar es Salaam, Tanzania
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