Under the terms of the agreement, both companies will create a new JV in Saudi Arabia and sign a shareholder agreement to reflect 50-50 JV ownership
European Lithium and Obeikan to co-develop lithium hydroxide plant in Saudi Arabia. (Credit: ivabalk from Pixabay)
European Lithium has signed a binding term sheet with Saudi-based Obeikan Group to jointly develop and operate a lithium hydroxide processing plant in Saudi Arabia through an incorporated 50-50 joint venture (JV).
Under the terms of the agreement, both companies will create a new JV in Saudi Arabia and sign a shareholder agreement to reflect 50-50 JV ownership.
Besides, the proposed JV will be granted an exclusive right to purchase spodumene mined from the current resource at the Wolfsberg lithium mine in Austria.
The capital investment for the lithium hydroxide processing plant will be fully funded through the JV.
European Lithium chairman Tony Sage said: “We are pleased to reach this strategic step in partnering with Obeikan that paves the way for significant Opex savings including greatly reduced energy and financing costs, and a much lower taxation rate.
“We look forward to progressing our plans to harness the latest technology in developing a facility of the highest quality and efficiency, in doing so, strengthen the economics of Wolfsberg and our future projects.”
The JV will develop, construct and commission a lithium hydroxide processing plant as well as operate the plant for the conversion of lithium spodumene concentrate from the Wolfsberg project in stages, said European Lithium.
According to their respective equity stakes in the JV, both companies are expected to contribute to the funding of the JV.
Completion of the transaction is subject to the Saudi Industrial Development Fund’s (SIDF) verification and an external valuation regarding the treatment of the in-kind contribution to be made to the JV by European Lithium.
Obeikan Investment Group CEO Abdallah Obeikan said: “We are pleased to have reached this agreement with European Lithium. We are convinced that our partnership will be beneficial for all stakeholders.
“This partnership will combine EUR expertise with the industrial knowledge of Obeikan and the strength of Saudi Arabia.”
In March this year, European Lithium estimated an overall capital expenditure of $866m for its Wolfsberg lithium project, based on the findings of the definitive feasibility study (DFS).
The project’s ore reserve is 11,483kt grading 0.64% Li2O, with a content of 72.9 kt Li2O of proved and probable ore reserve categories.