Novonix and TAQAT enter joint venture for graphite anode

Highlights:

• Novonix and Saudi Arabian TAQAT Development Company have formed a joint venture to establish a graphite anode materials facility with a capacity of 30,000 tonnes per annum.
• TAQAT will hold a 60% equity stake and Novonix will hold a 40% stake in the facility's construction and operation.
• The parties will establish an incorporated joint venture in Saudi Arabia, with Novonix contributing access to its proprietary intellectual property on a royalty-free basis to the JV.

Battery materials and technology company Novonix (ASX: NVX) has entered into a joint venture agreement with Saudi Arabian TAQAT Development Company to establish a graphite anode materials facility with a capacity of 30,000 tonnes per annum for use in electric vehicle and energy storage systems in the Middle East and North Africa region. The joint venture, which has been in discussion since 2021, will see TAQAT hold a 60% equity stake and Novonix hold a 40% stake in the facility's construction and operation. The government of Saudi Arabia aims to have 30% of all vehicles on its roads be electric by 2030 and has launched the country's first electric vehicle brand, Ceer, and plans to build its first international factory in the country. The JV will help to support a localised supply chain for the sector in the region.

Joint venture deal terms.

• Novonix and TAQAT will establish an incorporated joint venture in Saudi Arabia to produce high-performance graphite anode for use in electric vehicle and energy storage system applications.
• The JV will undertake engineering for the facility in its first year, with the target to begin facility construction in 2024.
• Novonix will contribute access to its proprietary intellectual property on a royalty-free basis to the JV for the production and sales of high-performance graphite anode in the MENA region.
• TAQAT will hold a 60% equity stake in the JV vehicle, and Novonix will hold a 40% stake, with each party contributing its share of operating and capital costs for engineering and subsequent facility construction and operation.

Saudi Arabia's electric vehicle market

As part of its Vision 2030 goals, Saudi Arabia aims to create a more diverse and sustainable economy, with the electric vehicle market playing a significant role. The country has set an ambitious target for 30% of all vehicles on its roads to be electric by 2030. In support of this initiative, the country launched its first electric vehicle brand, Ceer, in 2022, and a US-based EV manufacturer announced plans to build its first international factory in Saudi Arabia. Upstream projects, such as the anode materials facility to be built under this JV, will help support a localised supply chain for this sector in Saudi Arabia.

TAQAT signs MOU with Petro Rabigh

• TAQAT also announced that it has signed a Memorandum of Understanding (MOU) with Rabigh Refinery & Petrochemical Company (Petro Rabigh) to supply TAQAT Decant Oil, which TAQAT intends to use to build a petroleum needle coking facility using Chevron Lummus Global proprietary Needle Coke technology.
• This will allow the JV to access high-quality local precursor material within Saudi Arabia while also leveraging Novonix's existing suppliers of key feedstocks from North America and globally.

Joint venture decision-makers

Novonix will appoint the JV's CEO and COO, and TAQAT will appoint the JV's CFO. The JV will have a five-person board of directors. TAQAT has the right to appoint three directors to the board, and Novonix has the right to appoint two directors to the board, reflecting the parties' respective equity interests in the JV. Certain decisions of the board, such as major disposals, major acquisitions, joint ventures, indebtedness, capital expenditures, litigation, or other significant matters of a corporate nature, will require the approval of at least one Novonix-appointed director and one TAQAT-appointed director.

Deal completion timeline

The parties must incorporate the JV vehicle, provide initial funding for a front-end engineering and design study, and obtain merger control clearance (if required) from the Kingdom of Saudi Arabia's General Authority for Competition by 31 March 2024, in each case, or the JV will terminate.

Conclusion

In summary, Novonix and Saudi Arabian TAQAT Development Company have formed a joint venture to establish a graphite anode materials facility with a capacity of 30,000 tonnes per annum for use in electric vehicle and energy storage systems in the Middle East and North Africa region. TAQAT will hold a 60% equity stake and Novonix will hold a 40% stake in the facility's construction and operation. The JV aims to support a localised supply chain for the electric vehicle market in Saudi Arabia, which has set an ambitious target for 30% of all vehicles on its roads to be electric by 2030. The parties will establish an incorporated joint venture in Saudi Arabia, with Novonix contributing access to its proprietary intellectual property on a royalty-free basis to the JV. The parties must incorporate the JV vehicle, provide initial funding for a front-end engineering and design study, and obtain merger control clearance by 31 March 2024, in each case, or the JV will terminate.

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