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 foreign welcome to CEO insights I'm Marilyn De Guzman with investing News Network in this episode I'm speaking with Justin Brown managing director of element 25 an Australian company developing and producing low-carbon battery grade high Purity manganese hi Justin Hi Marilyn nice to be with you today good to see you uh let's start our conversation with just a brief overview of your company and how your manganese project and processing facility fit into the global battery metal space

yeah sure so element 25 is a pure manganese play so 25 is atomic number of Manganese hence the branding we have a manganese resource located in the southern pilbara region of Western Australia where we operate a mine that currently produces a high quality manganese oxide concentrate for sale to traditional steel markets what we're working pretty hard on in the background is developing our first processing facility to convert the manganese concentrate that we currently produce a butcher bread into a very high quality

low Carbon High Purity manganese sulfate monohydrate which is a critical ingredient in most electric vehicle battery chemistries and is a critical path in the electrification of the global vehicle Fleet so very exciting times for us a really fast growth trajectory for the company and we intend to be a pretty significant player in the battery metal space via our specialist expertise in producing uh the manganese sulfate that the battery backers require right so just sort of um setting the stage a little bit right

like there's the world wide shift towards renewable energy electrification and certainly demands for electric vehicle is being driven by that as well why is now a good time to invest in manganese as opposed to other battery metals yeah so the manganese story is a really interesting one so um one of the there's a number of drivers that are influencing decision making around selection of battery technologies and uh the raw materials that go into them uh one of the key issues is that the electrification of

the global vehicle Fleet is going to need a very large volume of the right materials to make the volume of batteries needed to put into all the cars that the electrification process will require so um whichever battery chemistry you choose you need an awful lot of these critical raw materials to make it happen manganese is um most often compared to nickel and Cobalt as a cathode material and the chemistry of cathodes in the current lithium batteries have sort of shifted chemistry with very ratios of cobalt

Nicollet manganese what's actually happening now though is that the supply chains are hitting really serious bottlenecks in relation to Cobalt nickel supplied manganese is being looked at as a replacement for those metals and and the future chemistries are going to use a lot more manganese than they currently do because manganese is comparatively more abundant than both nickel and Cobalt it has a much better ESG profile in that it is much lower carbon footprint it's also lower cost and can

be sourced from geopolitical environments like Australia where um the the geopolitics sort of align with the Ambitions of the battery makers that are that are electrifying their vehicle Fleet so um yeah look I think it's an exciting time for manganese I think you're going to see more manganese needed because of the transition to electrification but I think you're going to need um you know especially more manganese as the as the battery chemistry shift to more stable more material supply chains

of which manganese promises to play a really important part yeah so you mentioned geopolitical issues you know the geopolitical issues surrounding uh battery raw materials you know is one of the most important conversations I guess to be had when talking about meeting the anticipated demand for electric vehicles what are you seeing from your side of the fence on how geopolitics is affecting investments in battery or EV battery infrastructure yeah it's a really pivotal time I think Marilyn it's it's happening fast and

it's happening um in in at a large scale I think one of the pivotal changes has been the introduction of the inflation reduction act in the US which is putting some very clear tram tracks around the decision makers on the raw material supply chain side of the uh the vehicle business to say well you need to Source your raw materials from uh geopolitically aligned jurisdictions uh to the U.S um but I think there's another layer as well and that is that um the stakeholders in the in the electrification of the vehicle Fleet are

looking for car makers to use raw materials from areas that have tight controls on environmental social governance issues as well so um for example if you Source your magazines from Australia you have a much better chance of understanding the um the standards that are applied to the extraction of the material in terms of environmental social governance than you do perhaps in certain countries in other parts of the world so that really influences the decision making I think one of the um the things that is is influencing it

as well is the the dominance of China in the processing raw materials for battery for batteries so um when you're looking to transition your whole current Street to electrification you want to be sure that you're not going to be subject to um arbitrary government restrictions perhaps on the supply of certain raw materials as we've seen from time to time with with China and so they're looking to partner with companies like element 25 where they can be sure of a long-term stable and cost effective and

low carbon supply of these materials so geopolitics are playing a really important role in these decision-making processes from your standpoint when it comes to all the infrastructure for the batteries that we will need for the electrification and for Ev demand for electric vehicles how like how realistic is it to be able to disrupt or be able to at least um move uh or reduce dependence from China of of economies like in Europe and in North America yeah it's a good question I think um I think interestingly we are seeing it

start to happen I think there's a number of projects in the battery or material space that are looking to compete directly with China and I think adding the uh geopolitical and the ESG layers to the decision making process means that non-chinese processes are much more able to compete um interestingly as well um I think it's the the field is right for Innovation so if you look at element 25's processing flow sheet we've built a new flow sheet from the ground up uh over the last six years

um basically looking at better ways to process manganese and that includes being able to compete with cost uh with processes in China but also it also adds those additional layers of ESG you know Carbon intensity and geopolitics so I think that um it's it's one that historically is you know did competing with Chinese producers has been difficult in the past however China also is raising their standards right so as they raise their their labor standards in their environmental governance standards they their cost scope also so

I think that levels the playing field a bit as well so in our case for example when we build our facility in Louisiana which we're currently uh working on um we will compete directly with Chinese Supply on cost quality and uh the carbon intensity and the other ASG factors we talked about so I think it is quite possible to do I think you have to be Innovative and you have to be um you know you have to be applying sort of good critical thing to your decision making but I think it is possible to

compete with China so let's talk about element 25 you've alluded to some of your strategies because your company's vision is to build a world-class zero carbon manganese business so you've talked about some of the strategies but can you give us a little bit more of a understanding of what your strategies are to achieve this goal yeah sure so um well we started with uh was a very large resource of butcherbert so we have just to give you some context around that we've got 260 million tons

in resources at the moment um using approximately 20 of that resource in our stage one production operation we have a mine life of over 40 years so you can under you know you can see pretty easily that we will be supplying Australian manganese to Global uh battery or material markets for a very long time um the second level that or the second sort of uh stage of development was to develop a flow sheet which was um it much improved on the traditional uh sort of processing methodologies that are used in China and we did that with a

couple of things in mind one was to dramatically reduce the energy consumption utilize processing technologies that use reagents that are lower in carbon intensity we use less reagents than some of the traditional flow sheets and because of the way we produce the ore in the first place and then process it Downstream frame we already start with a very very low carbon intensity so we we have a carbon intensity estimated about 1.7 kilograms of CO2 per kilogram of hbmsm that we produce this is significantly lower than

anybody else globally at the moment and we have a pathway to halve that at the in the next round of developments both by sourcing reagents from uh more renewable sources and also getting our energy from more renewable sources and then of course we'll continue to drive that carbon intensity down so carbon intensities been at the front of mine throughout the whole process and we'll continue to push download pressure on that that carbon intensity and maintain our Global leading position in that

regard and you've also released a flexibility study for your processing facilities can you give us some of the highlights and I think you've mentioned some of it already but uh could you give our viewers some of the highlights of that visibility study yeah so in April we released a feasibility study that contemplates the production of up to 130 000 tons of hpmsm in a in a site in Louisiana in the USA um we have announced Partnerships with General Motors and stalantis who will both contribute financially to the

project but also be substantial off-take Partners in in buying the product for us once we're in production um the way we've designed the facility will have a train one which will produce 65 000 tons of hpmsm which will come into production in 2025 and that will be followed by a second train which will double production of high protein manganese sulfate uh to 130 000 uh tons per annum of production so the economics are pretty clear and robust we have an MPV of over 1.6 billion dollars uh the

the production facility at full production will generate cash in excess of 150 million US dollars per year um so it promises to be a game changer for the company Capital cost estimates are currently just under 300 million US Dollars still Anderson GM are contributing over 100 million dollars to that funding stack and we're currently in discussions with both debt and equity funders for the balance including engagement with the Department of energy in the US who have a a loan program called the advanced technology vehicle

manufacturing Loan program that is designed specifically to provide funding to these types of projects so that is well not guaranteed is certainly another Avenue that we're pursuing as well so um we're currently in the feed stage so the front end engineering and design stage of development which has been which has been ramping up uh since the face building study and we will um push towards a final investment decision towards the end of calendar 2023 so um very exciting times for the company

in that regard you've talked about your uh two of your important off-take agreements I think that that's that's decided as a trend where you know Downstream companies I guess in this whole value chain for battery minerals are you know looking to looking for ways to secure their supply when when uh you know such a big uh uh supply shortages anticipated are you seeing this uh Trend continuing where you know the suppliers are down the value chain are you know collaborating through off the agreements like it's uh

element 25 uh looking at more agreements like this as a you know as a way or as a strategy for profitability yeah I think we certainly are and I think we are certainly seeing that Trend I think um the vehicle makers know that battery raw material supply is a critical part of their development plan I think that they know that if they want to meet their targets from an ESG perspective in a carbon intensity perspective they need to have good control uh end to end in terms of a vertically integrated supply

chain so they need to know where their manganese is coming from and they need to know how it's processed it and that it's produced in an ethical and sustainable way so the way they're doing that as we see it is to partner directly with the miners like element 25 who also have the processing technology to produce the material to the specification and with the ESG credentials that they're looking for and in that way they can control the supply chain so you're seeing this happen in

lithium you're seeing it happen in nickel and Cobalt and uh graphite and you're also seeing it happen with manganese and I think it's going to continue to be a theme going forward we're looking at further transactions with other car makers as well as you point out and that's obviously on our train one development but then you'll see that followed by a similar strategy for train too so yes I think I think that style of doing business is here to stay so what's the next steps uh what can the

investors look forward to over the next few months from element 25. yeah so we've got um obviously the engineering going a pace in Louisiana for the construction of the first facility we've got permitting going in parallel with that we're working on additional off-tech agreements and obviously project financing arrangements to underpin the development of that that project in addition to that we're looking to expand the concentrate production at the butcher mid mine to um to to sort of fuel our growth in

terms of providing more manganese units into the supply chain um so it's a pretty busy time I think the investors can look forward to a lot of activity a lot of uh value-adding growth uh to the company and its activities I think it's a really interesting time for us sounds great I appreciate your sharing your insights to our viewers today Justin thanks man I really appreciate your time and thank you everyone for watching join us again next time on another engaging conversation on CEO insights

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