Company Interview / Element 25 on track for world-first

Justin Brown from Element 25 shares insights on introducing autonomous mining trucks with Scania at their Pilbara manganese mine. He states this as the world's first rollout, improving safety, reliability, productivity, and reducing diesel consumption for a greener operation.

Justin highlights the project's role in Element 25's (ASX: E25) ambitious plan to increase production to 1.1 million tonnes annually. The deployment includes a trial of a battery-powered vehicle, inching towards full electrification. The initiative will retain jobs by transitioning to high-tech roles, enhancing workforce benefits.

Significantly, Element 25 (ASX: E25) receives a $243 million grant from the US to build a manganese refinery in Louisiana, aiming to supply General Motors and Stellantis. Justin remains optimistic, viewing current market scepticism as temporary, with promising long-term prospects for electrification.

Full unedited transcript:

0:00

Element 25, teaming up with Scania and regrouped to introduce a fleet of autonomous mining trucks at its manganese mine in Western Australia's Pilbara region. To get us across the details of the project, element 25 CEO Justin Brown joins me now. This is going to be, I guess, a fully autonomous, um, fleet here. And is it the world's first? From what I understand, Justin,

0:22

this is the world's first rollout of scanning automated solution for the Pilbara mining industry. So we'll be the first site where these trucks will be rolled out and bring all the benefits of autonomous mining. Uh, at least transport to to our site in the Pilbara region. So yes, exciting step for us and for Scania and regroup. All right. Tell us a little bit more about I understand it's launching next year.

0:43

Yeah. So the key here is that the autonomous fleet will bring a number of benefits, including improved safety, improved reliability and productivity, but also an all important reduction in diesel consumption, which improves our carbon intensity. So I think all of these things roll together to provide a really nice solution for our planned expansion of the mine, where we're looking to move to 1.1 million tonnes per annum of concentrate production, which also is feedstock for our battery grade manganese. So the vertically integrated low carbon solution is what our offtake partners are looking for. And this automated mining solution is a step in the right direction on the journey to full electrification, which ultimately is where we want to get to. That'll take a couple more years, but this is an important first step. So obviously this is going to be positive in terms of productivity and lowering your costs. What about the safety aspect? Yeah I think it brings a lot of safety benefits in terms of obviously automated trucks don't suffer from driver fatigue. They don't suffer from some of the things that that human operators can, can, uh, you know, be at risk for. So I think that

1:43

overall safety outcome will be a benefit to the group working at the site and to the project and the company. What does it mean in terms of, I guess, adding to your overall revenue? Because I imagine you'll be able to reduce diesel consumption. You're looking towards electronic Vehicles moving forward as well.

2:01

Yes, I will, as part of this first rollout will bring in one battery powered vehicle, fully electric water cart, which will be effectively a trial program to to help us understand all the infrastructure needs around recharging and cycle times and the like. So, um, but the the main mine fleet will be diesel powered, but obviously it will be a step towards a full electrification, which will come in the next sort of upgrade in a couple of years time. But yes, improved productivity, lower costs, um, a better bottom line for the business, but also an improved carbon footprint as well, which is which is a key part of our strategic goals. Also, does the lower cost, Justin, mean that jobs are being cut? No. So I think what we're seeing is a transition to, uh, sort of high tech jobs, if you like. So the the operators on site will not necessarily be there, but the obviously they'll be replaced by fleet management teams as well as the all the sort of high tech support that needs to go with the autonomous fleet. So a net job will not be reduced. But obviously the remote site based jobs will be reduced, which is obviously, you know, one of the stress points in Fifo

3:01

mining. So I think we're bringing an overall benefit to the employment market as well. Just tell us a little bit more about element 25, how you're going in terms of some of your exploration.

3:12

Yeah. So I think the next big milestone for us is to publish an update to our resource base. So we've recently completed a big infill program. And that obviously will roll into an upgrade to the resource calculations and then a reserve. So we'll demonstrate through that exercise the long life nature of the Butcher Bird mining project. So we're targeting a 20 year reserve. Obviously the numbers will speak for themselves, but we should be able to bring that to the market in the next week or so. You also, I understand, have been gifted about $244 million from the Biden administration a couple of weeks ago. Tell us about this.

3:44

Yeah. So as your viewers probably know, but if they don't, I'll give you a quick update. So we're taking some of the butcher bird material, and we're taking it to Louisiana to feed into our proprietary flow sheet, which will be the first of its kind, high purity manganese sulfate refinery to be built in Louisiana. Obviously, the Doe has got right behind that with the selection of that project for a grant of 243 million Aussie dollars, or 166 million USD, as a contribution to the construction costs of that facility, which will supply an important battery critical raw material to our offtake partners, General Motors and Stellantis. So yeah, really important synergies between the Australian Critical Minerals Inventory and the desire for the US to onshore the capability to produce these critical raw materials for their burgeoning electric vehicle industry. So how much are you progressing there for with some of these plans for your battery operated, I guess transition here?

4:39

Yes. I mean, full steam ahead on the mine expansion. The automotive fleet will be a step towards full electrification, obviously. Then that, uh, facility in Louisiana with the order that grant is also full steam ahead. So we're looking to enter into construction for that facility in 2025 for completion 2026. And so that will provide, I guess, the world's first vertically integrated mine to product critical battery material for manganese into the battery industry, which will then, you know, in time, come full circle and supply hopefully manganese sulfate to Shania's fully electric mining fleet, which will then roll out in due course. Do you think, given these world firsts, Justin, you have been potentially, um, punished a little bit unfairly by the market? Yeah, I think at the moment there's a little bit of a lull in the, in the whole electrification story, and I think the market's not seeing the long term value in our stock and others as well. I don't think we're an orphan here. But I think really this trend, although there's a slight slowdown in the pace of electrification, I think the fundamental macro is ongoing. And I think, you know, we'll see

5:38

this when we look through the rearview mirror and a year's time as a very temporary lull on a much longer term journey to full electrification of the vehicle fleet. And I guess that doesn't just is not limited to passenger vehicles, but also to heavy industry as well, including mining and long, long haul transport, which we which will be part of.