Company Interview / Revving up refining capabilities with Nissan Chemical

Topics Discussed:

Element 25's (ASX: E25) collaboration with Nissan Chemical for a Japanese facilityThe scalability and future plans of the hub and spoke model for manganese refineriesComparison of manganese with nickel and cobalt for battery materials

Element 25 (ASX: E25) is teaming up with Nissan Chemical to explore building a facility in Japan for high purity manganese sulfate monohydrate, vital for electric vehicle batteries. They've signed a non-binding agreement and aim for a final decision by 2026.

Justin Brown states Element 25 (ASX: E25) owns and operates the Butcher Bird Manganese mine in Western Australia. They have deals with General Motors and Stellantis for a similar facility in Louisiana, showing synergies that could streamline the Japanese project. Element 25 aims to develop a hub and spoke model for manganese sulfate refineries worldwide, including Japan, Europe, and the USA 🇯🇵🇪🇺🇺🇸.

Manganese is lower cost and more abundant than nickel and cobalt, making it a promising material for future battery demand. Justin notes that while there will be some equity required, they aim to minimise it with strong financing support, both privately and publicly.

Full unedited transcript:

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Element, 25, has teamed up with Nissan Chemical to explore building a facility in Japan to produce high purity manganese sulfate monohydrate, which is a crucial element in electric vehicle batteries. So they've signed a non-binding agreement to study the project and are aiming for a final decision by 2026. So let's get the details. Element 25 CEO Justin Brown joins me now. Justin, welcome to Osiris. Thanks so much for joining us. So maybe you could just introduce us to E 25 to start. What is it that you do now? What is it that you're planning on doing with Nissan?

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Thank you for having me and thanks for the opportunity. Element 25 owns and operates the Butcher Bird Manganese mine, located in the southern Pilbara region of Western Australia. It's a very large resource of manganese ore and we've been working for several years to develop technology, to process it into a high purity manganese sulfate product, which is a key raw material for battery manufacturing, particularly for use in electric vehicles. Um, and your listeners that are familiar with the story would know that we've done deals with General Motors and Stellantis to build a facility in Louisiana to refine the ore into this important battery raw material. And this latest announcement is the pipeline development that we aim to roll out over the coming years, where we want to build a sort of hub and spoke model with a number of these refineries around the world. And this is a very pleasing development in our ongoing discussions with Japanese counterparties to develop a project in Japan. This, uh, phase of the study will look at a scoping study to establish the viability at a high level of the project, and then we'll delve deeper into feasibility study. And, as you said, leading to a

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final investment decision in 26. So this hopefully will be an important part of our long term growth plan. Okay. So are there lessons from what you've already achieved in Louisiana that will I guess, be able to be replicated in Japan, perhaps saving some of the, you know, the blood, sweat and tears that go into all of this type of development.

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Yeah, we expect so. I mean, we've done a lot of detailed engineering on the Louisiana facility and that should, to a large part, rolled directly across to Japan. Each side is unique. So you have to obviously localize it for the local conditions. But one of the interesting things about the Tokyo Bay site is that it already has established sulfuric acid production. And through Nissin Chemicals other subsidiaries, we have access to a number of the other key reagents. So there's a lot of synergies. So to some extent we can plug and play. We can take the design from Louisiana, albeit we'll need to modify it slightly. For a Japanese setting. It should be, um, up to a large part, at least very similar. So yes, more streamlined to execute. Okay. Um, and so this hub and spoke model that you're, you're planning to work toward, what could that eventually look like. You know, across how many geographies, how big of an undertaking is this and how big could it make it to five? Yeah, it's an interesting question. So it's a very scalable technology. So the first train that we're building, Louisiana will

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produce about 65,000 tons of this high purity manganese sulfide, or hpm, as we call it, that will consume less than 10% of the plant production from the mine at Butch Byrd. So we have a lot of capacity to grow. So, um, the idea is to replicate that scale. So each module will be approximately the same size. We have good discussions going on in Europe as well as in Japan. And of course, the more advanced, uh, project development in Louisiana as to how many ultimately we will build will depend on the demand growth that everybody's expecting to come with the transition to electric vehicles. One of the other interesting things that's happening is that battery chemistries are shifting, as well, as automakers look for more reliable supply and lower costs, as well as the ethical and environmental considerations. And manganese takes a lot of those boxes extremely well. So we expect manganese demand to grow, uh, fast and for the long term. And so we expect to build many of these refineries in various parts targeting the first instance USA, Japan and and the EU. Well, it's an interesting one, isn't it, because I think a lot of investors are

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very cautious right now on the EV thematic part and parcel because of what's happened to the price of lithium and all the talk about hybrid vehicles and, you know, whether or not, um, EVs and the battery technology will just continue to evolve, you know, rendering some inputs not obsolete, but less in demand. Like what what sets manganese apart from from some of the story that's happened with lithium? Yeah. So I think, um, it's quite a different story to lithium, um, in that it sits in the cathode with typical nickel and cobalt, um, in an NMC cathode material, um, the nickel and cobalt, a high cost, um, relatively difficult to source materials. Manganese, on the other hand, is lower cost and more abundant and can be sourced from, uh, ESG sort of, uh, reliable if you like jurisdictions like Australia. Um, we're sort of, you know, the NMC cathode is sandwiched, um, against the cathode, which is what's dominant in China, which is a very low cost,

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um, battery. But it has some performance issues around energy density, the like manganese added to either the chemistry or increased in NMC, chemistry kind of sits in a sweet spot in between, where you can increase the performance and reduce the cost of both those chemistries under some of the new technologies coming through. So we see the future for manganese is extremely bright, and we think long term our forecasts will be will become reality and the business will do very well. Okay. I know you, um, undertook an SP, a share purchase plan in June. Is there any, you know, need to raise capital anytime soon?

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Uh, look, we're engaged in financing discussions both on the mine expansion that we want to do with butcher, but also the Louisiana facility. Um, so, yes, there are going to be some movements in the financing space, but they'll be on the back of strong financing support from in the case of the Louisiana facility, hopefully a doe, uh, supported facility under the IRA programs that they're running. But we also have some private sector funding options there. Um, and in in Australia, as we've announced, we're engaged with the North Australia infrastructure facility to, uh, to sort of, uh, cornerstone that financing. So I think, you know, is there going to be some equity required? Yes. But we're going to minimize that and obviously do it under the right circumstances.