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Di BrookmanDi Brookman• 1st• 1stEV Battery & Supply Chain - Senior AnalystEV Battery & Supply Chain - Senior Analyst

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NOVONIX (ASX.NVX, OTC.NVNXF) – In our 15 June report, we discuss the recent LGES agreement and the March announcement to produce anode material in Saudi Arabia. There has been much written about the LGES deal but little written about the Saudi deal to form a 60%/40% JV with Government supported TAQAT Development Company (TAQAT), to build a 30kt/year anode material facility in Saudi Arabia. We look at what is going on in Saudi. Benchmark Minerals is also looking at Saudi anode production. So what is going on?

In 2016, Saudi developed "Vision 2030" a strategic framework designed to modernise and diversify the Saudi economy away from its dependence on oil towards zero emissions by 2060. Key to Vision 2030 is the Saudi governments plan to transition 50% of its domestic energy supply to renewable sources by 2030 and to produce ~300,000 EVs/year by 2030 for sales throughout the MENA. Technology is playing a central role in developing futuristic living and transport (refer NEOM).

To achieve this, Saudi launched the nation’s first EV brand Ceer, which plans to produce its first EV in 2025 and achieve an annual design capacity of 150,000 EVs in 2030. In addition, US Lucid Motors is building its first international EV gigafactory in Saudi, with first production expected 4Q23.

This is where NVX steps in. To support a local EV ecosystem, Saudi targets local content at ~45%. As there is no local graphite resources and each EV requires ~50kg of graphite, there is strong demand for anode materials in Saudi.

The Saudi Public Investment Fund (PIF), the worlds 6th largest sovereign fund, owns ~67% of Lucid Motors and is investing heavily to support the development of an EV ecosystem capable of meeting demand through the MENA. The Government supported TAQAT, and NVX JV partner, is one of 71 companies formed to support Saudi’s Vision 2030.

NVX suggests the PIF could offer up to ~80% debt and equity to support a capital efficient project. The JV is undertaking FEED, with plans to start construction in 2024 and production in 2026.

An EV cluster is being formed in Jeddah, where TAQAT will build a needle coke plant to supply the TAQAT/NVX synthetic anode plant. The Lucid Motors gigafactory is understood to lie within the cluster and will likely be an offtaker of the NVX (net 40%) high performance synthetic anode.

Back to the LGES Agreement...LGES/GM are building a 50GWh battery plant in Tennessee up the road from NVX anode plant in Chattanooga. In all, LGES has ~250GWh planned in North America, which will require ~250,000t of anode material each year. The NVX LGES agreement is for an average of just 5kt/year for 10 years...and with zero commercial high performance synthetic anode made in the US...there is much upside potential. #ev #anode #graphite #technology #evbatteries #evecosystem #criticalminerals #investing #construction