NextSource Materials (TSX: NEXT) says it will cost $280 million to build a new graphite anode plant in Saudi Arabia for electric vehicles as the company expands globally.
NextSource Materials to Invest $280 Million in Saudi Arabian Graphite Anode Plant for Electric Vehicles
NextSource Materials (TSX: NEXT) has announced a $280 million investment to build a new graphite anode plant in Saudi Arabia, expanding its global footprint in the electric vehicle (EV) industry.
New Graphite Anode Plant Details
According to a recent technical study, the proposed site will produce 20,000 tonnes per year of graphite anode active material for lithium-ion batteries. This new plant will operate similarly to NextSource’s existing facility in Madagascar, which supplies major companies like Toyota and Tesla. The company is also advancing a plant project in Mauritius and considering expansions to the United Arab Emirates and North America.
Financial Projections and Funding Plans
The Saudi Arabia project boasts an after-tax net present value of $677 million at an 8% discount rate, with an internal rate of return of 20.3%. The construction, along with $12 million in working capital, will be funded through equity. NextSource is in discussions for debt financing and is open to joint venture opportunities.
Strategic Benefits of Saudi Arabia
“Developing a battery anode facility in Saudi Arabia positions us to capitalize on the Kingdom’s robust infrastructure, strategic location along shipping routes, and highly supportive business environment,” stated president and CEO Craig Scherba. Saudi Arabia’s Vision 2030 aims to expand EV output and battery mineral mining, attracting investments from companies like Barrick Gold and Ivanhoe Electric.
Saudi Arabia’s Investment Incentives
Saudi Arabia is transforming into a regional financing hub, offering foreign investors full project ownership, co-funding up to three-quarters of capital spending, five years of royalty-free operation, a 20% corporate tax rate, and 30% discounts on local processing.
Revenue and Capacity Projections
At full capacity, NextSource’s Saudi plant could generate $230.1 million in annual revenue, with $128.5 million in earnings before interest, taxes, debt, and amortization (EBITDA).
Next Steps for the Saudi Project
NextSource is in the process of selecting a site for the Saudi project and preparing a comprehensive feasibility study, which will include front-end engineering, design, and environmental and social impact assessments. Commercial production could begin 16 months after construction starts.
Future Plans
NextSource aims to develop a graphite anode processing hub over the next five years, with a total production capacity of 100,000 tonnes per year of coated spheronized purified graphite. The company plans to use modular plants to align production with automaker demand.
Stock Market Response
Following the announcement, shares of NextSource Materials rose by 2.4% to C$0.85 in Toronto, valuing the company at C$132.9 million ($97 million). The stock has traded between C$0.60 and C$2.10 over the past 52 weeks.
