Ann: SungEel Hitech Recycled Anode Material Performance, page-20

"costs of shipping graphite concentrate to Kwinana from overseas is impractical."

I think impractical may be too stronger word. If Spherical Graphite was a low value item then I'd 100% agree. While now rather dated, past EGR reports have stated or implied a price point of $4k/t, or higher if its spherical coated graphite with higher performance characteristics.

I tried to find good sources of shipping container costs but didn't find much consistency. With the exception of the recent price spike in shipping it should be under US$5,000 for a 20foot container able to hold 25ton's. That would put the price of outwards shipping at under US$200/t or 5% of revenue. Lower is clearly better but having outward shipping costs at under 5% of revenue is not an impossible business model. If a vehicle used 50kg of spherical graphite then the incremental shipping cost of Graphite to the EV price would be US$10. That price is not going to have an EV customer saying your IRA eligible graphite has a shipping cost that is too expensive.

If the business case is that sensitive that 5% swings it from profitability to losses, its far less robust than modelled. Page 14 of the Sept 2019 case noted costs per ton of US$2,275 while other slides have noted $35m EBITDA from 20kt ($1,750/t). This implies the modelling at that stage had a 43% gross margin. A 5% change (and it should already be part of the modelled costs) is at the margins.

Its only the larger customers where it may be practical to locate a purification & possibly a shaping plant near their facility. For medium and smaller battery plants EGR are going to need to ship to that location and it could be in any number of different countries (assuming they do actually build something). Only some of any shipping cost from WA would be incremental to an optimally located plant.

One more set of regulations to give definitive rules to go around foreign entity of concern, but the 31 March 2023 set had the US Treasury stating that from 2025, EV's containing any critical minerals processed by a foreign entity of concern would make vehicles ineligible for the $7,500 credit. The US OEM's will need spherical graphite from an approved source in mid-late 2024 so vehicles sold in 2025 can be eligible. I'm not sure EGR has time to muck around and may need to back-track again and recommence Kwinana. I just don't think you will produce late 2024/early 2025 from an as yet unnamed, unpermitted US site.