European Lithium (ASX:EUR) has completed its due diligence and is aiming to sign a joint venture (JV) agreement with Obeikan Investment Group by the end of May. The companies had signed a memorandum of understanding earlier this year to build and operate a lithium hydroxide plant in Saudi Arabia. The plant will be co-developed and operated by a 50:50 JV partnership for EUR’s Wolsfberg lithium project in Austria. Obeikan is one of Saudi Arabia’s 100 largest companies, with operations in 16 countries.
Hydroxide Plant to Reduce Operating Costs and Provide Attractive Financing Options
The hydroxide plant is expected to deliver significant cost savings for the Wolsfberg project, reducing operating energy costs by over 80%. The plant will also provide access to a much lower corporate tax rate of 20% and more attractive financing options. According to EUR’s executive chairman Tony Sage, these benefits will create enormous savings in operating costs and lower Capex for the Wolfsberg project, significantly impacting the just completed DFS’s NPV and IRR calculations.
Strategic Partnership to Accelerate Sustainability in Energy Field
Eng. Abadallah Obeikan, CEO of Obeikan Investment Group, called the memorandum of understanding a “great step ahead in further strengthening the Saudi Australian economic collaboration.” He added that the partnership is in line with Obeikan’s strategy of accelerating sustainability within the energy field. EUR and Obeikan have agreed to negotiate suitable commercial terms to enter a 50:50 joint venture partnership for the co-development and co-operation of the plant.
Conclusion
European Lithium’s plan to co-develop a lithium hydroxide plant in Saudi Arabia with Obeikan Investment Group is moving closer to reality, with the due diligence completed and a binding JV agreement expected before the end of May. The hydroxide plant is expected to provide significant cost savings for EUR’s Wolsfberg lithium project, reducing operating energy costs and providing access to a lower corporate tax rate and more attractive financing options. The partnership with Obeikan Investment Group is expected to further strengthen the Saudi-Australian economic collaboration and accelerate sustainability in the energy field.
