Former rivals join forces for commitment to European EV venture

With China and the United States having dominated the world’s electric vehicle headlines, their European counterparts are now rapidly joining the party and acknowledging the industry’s scale at a time when mass EV adoption is around the corner.

With China and the United States having dominated the world’s electric vehicle headlines, their European counterparts are now rapidly joining the party and acknowledging the industry’s scale at a time when mass EV adoption is around the corner.

Last week, representatives from France and Germany agreed to a commitment of 5-6 billion euros to establish two production plants over the next four years. One will be located in France with the second in Germany but both are expected to employ around 1,500 employees in each.  

The alliance will focus on developing high-density lithium-ion, producing batteries for the purposes of electric vehicles.

“This is of strategic importance for Europe,” said French Finance Minister Bruno Le Maire at the launch of the initiative.

With Europe once holding a dominant position in the global automobile marketplace through the likes of Volkswagen and Daimler (Mercedes-Benz), there has been a shift in recent years towards the lower end of the cost spectrum.

Now, there is just one solely European company in the world’s top 5 car manufacturing companies. Volkswagen Group sits atop in first place but is followed by Toyota Group (Japan), Renault-Nissan Alliance (Europe & Japan), General Motors (United States) and Hyundai Group (Korea).

Volkswagen has already signalled their commitment to the abolishment of traditional combustion engines, announcing in March their plans to launch 70 different electric vehicle models over the next decade, selling 22 million of them.

But with these lofty production forecasts, coupled by those of Tesla and the 486 registered EV manufacturers in China – the world currently does not have the mineral resources to meet battery demand which is why there have been a number of long-term supply contracts signed by EV manufacturers to secure supply of key input materials like graphite and nickel.

Elon Musk has stated, “Our cells should be called Nickel-Graphite, because primarily the cathode is nickel and the anode side is graphite with silicon oxide… [there’s] a little bit of lithium in there, but it’s like the salt on the salad.”

It’s why graphite is the single biggest raw input material for Tesla’s gigafactories and likely to be the same case in these new French-German plants.

Because of this impending supply squeeze, we have seen a number of large offtake agreements signed between graphite miners in Africa where the high-quality of graphite located in the sub-saharan continent is ideal for battery anodes. Black Rock Mining, Walkabout Resources and Nextsource Materials are just some of the graphite companies now committed to long-term supply with Asian offtake partners.

With the new alliance formed between formidable European powerhouses, their 5-6 billion euro commitment to be producing batteries by 2024, at scale, may be a sign of things to come as global supply security intensifies for raw input materials.

In what may signal upcoming activity, it is worth noting that BlackEarth Minerals (ASX: BEM) has recently appointed Ms Eileen Hao as a company consultant. Well regarded within the graphite industry, Ms Hao has been instrumental in negotiating on behalf of Syrah Resources, Superior Graphite and Imerys.

Having recently completed an advanced Scoping Study which identified their Maniry Graphite Project to have a 10-year mine life capable of delivering in excess of US$600 million of graphite revenues of graphite revenues, BlackEarth shapes as a prime long-term supplier of battery-suitable graphite. Whether those deals emanate from China, Europe or the United States, competition within the space will intensify as we get closer to 2023, where Benchmark Minerals Intelligence has identified ‘base case” battery graphite supply shortages to commence.

“The contracting of Ms Eileen Hao is an important step for the Company in becoming a leading developer and supplier in the global graphite industry,” said BlackEarth Minerals Managing Director, Tom Revy in a Company announcement.  

“With her substantial industry experience in providing consultancy services to leading global graphite companies, BEM is confident that Ms Hao will provide the Company with significant technical and commercial value in terms of positioning and utilising her contacts to promote the BEM business in the Chinese market.”

BlackEarth Minerals trades under the ASX code: ‘BEM

More information on BlackEarth Minerals can be found at their Investor Centre.

*Reach Markets are paid a retainer to assist NTU with private investor management.

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