Canadian-Saudi battery plant to cut reliance on China

• Northern Graphite to build in Yanbu
• China supplies 95% of graphite
• Will produce anodes for EVs and robots

A Canadian graphite producer has signed a deal to build Saudi Arabia’s first battery anode material plant that will supply key materials for electric vehicle batteries.

The planned facility in Yanbu, an industrial city on the Red Sea coast, is initially expected to produce enough material to support around 2.5 million electric vehicles (EVs). 

Graphite is a critical material used in battery anodes, where it stores and releases energy in EVs and other rechargeable devices.

The plant, intended to be operational by 2028, aims to produce 25,000 tonnes of battery anode material a year in its first phase but could “very easily” double its capacity, the CEO of Northern Graphite told AGBI.

“What it will drive us is demand,” said Hugues Jacquemin.

The facility will be the first of its kind in Saudi Arabia as it steps up efforts to position itself in the global clean-energy supply chain.

It will be 51 percent owned by Saudi investment company Al Obeikan Group and 49 percent owned by Northern Graphite Corporation.

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Initial construction will cost $200 million, with the Saudi Industrial Development Fund providing between 50 and 75 percent and the remainder coming from commercial banks, Jacquemin said.

“It gives us the position from which we can start servicing North America and Europe in 2028. Nobody else can really do that.”

He said that the latest deal was partly inspired by efforts to support non-Chinese supply chains to avoid costs associated with trade tariffs. China currently accounts for around 95 percent of the world’s battery-grade graphite supply.

“Saudi Arabia was not even on the radar two years ago,” said Jacquemin. 

“Right now, the world needs an ex-China supply chain and for graphite there isn’t one,” he said. “By doing this you will be creating a first in that field.”

The International Energy Agency projects that global demand for graphite will increase by 130 percent in 2040 compared with demand in 2024.

The Yanbu plant will process graphite sourced from Northern Graphite’s Okanjande mine in Namibia. 

Jacquemin said that much of the material produced will be used for electric vehicles but added, “of course, the bigger market is not just EVs. There’s all the energy storage, there’s robots, and so the battery industry is much more than just EVs.”

Northern Graphite said it is in “advanced” talks with around 30 cell manufacturers in Europe and North America to sign off-take agreements. Currently, Jacquemin said, there are no potential buyers in Saudi Arabia. “But there will be,” he added.

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Saudi Arabia wants to develop a clean technologies industry. Among its most high-profile projects is the electric vehicle manufacturer Lucid, backed by the $930 billion Public Investment Fund.

The cars, mostly built in Arizona, are now being assembled in Jeddah with plans to bring more of the manufacturing process to Saudi Arabia this year. There are currently no commercial cell makers in the country.

Jacquemin added that the company is also looking to Saudi Arabia not just for its perceived tariff insulation, but also as a low-cost manufacturing base. 

Incentives from the government and the cheap cost of labour and energy could make it 20 to 30 percent cheaper to manufacture in Saudi Arabia compared to Europe, Jacquemin said.

“Having a very low-cost position is important for us because, even though there are tariffs and duties that have been put in place, the cell makers are not really making much money, so you have to be very aggressive and low-priced,” he said.

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The plant is looking to hire 60 percent migrant workers to staff the facility and will rely on desalinated water for cooling.

It has no plans to install independent renewable energy capacity and will rely on electricity from the grid, which is almost entirely powered by fossil fuels.

Jacquemin said that these decisions should not conflict with the company’s environmental, social and governance commitments, citing the factory’s “relatively low” energy demands, but added that ESG impact is not the company’s biggest concern.

“For us, the most important thing is to get into production as quickly as possible because there’s no material available outside of China today,” he said. 

“So ESG kind of takes a second importance at the moment until the market can be satisfied.”