Navaid Alam on Bloomberg TV – 27 Sep 2023
Strategically Located Facility:
Our processing facility is in Yuma County, Arizona, between Tacna and Dateland, AZ, close to the California border. It is accessible by truck within 4 hours from ports in Long Beach, California and Ensenada, Mexico.
Cobalt hydroxide feedstock is expected to be received by container at the Port of Ensenada, Mexico, for transfer to our facility by truck.
Our property is accessible by both interstate highway and rail. Our 139.5-acre property spans the Union Pacific Railroad tracks and U.S. Interstate Highway 8.
Fast-Growing Demand for EV Battery materials:
The Facility will service the fast-growing EV Battery market in North America. This sector is undergoing a major transformation led by U.S. car manufacturers, global industrial conglomerates, and the U.S. Federal Government, with billions of U.S. Dollars in investment. In North America, the market for EVs is expected to grow at a CAGR of between 35-37% from 2022-2028, reaching approx. US$330bn in 2028, which is equivalent to about 2.9m to 3.0m EVs per year by 2028.
There is currently no solar-powered battery-grade cobalt processing facility in the United States, as most of that capacity is presently located in China.
Experienced Management Team:
EVelution Energy’s management team comprises C-suite level professionals who bring extensive experience in developing, operating, and financing non-ferrous metal processing facilities, as well as oil and grain terminals and other core infrastructure.
Our management team’s core infrastructure asset experience has occurred worldwide in strategically important locations for the countries in which they were developed. Team members have extensive experience in partnering with large blue chip multi-national companies, global commodities corporations, sovereign wealth funds, pension funds, endowments, family offices, multilateral agencies, and private equity funds.
Market Opportunity for Battery-Grade Materials
The Facility will purchase input materials such as Cobalt Hydroxide and other Cobalt Intermediates from major suppliers under long-term supply contracts and will process such Cobalt Intermediates up to Battery-Grade Cobalt Sulfate, to be sold under long-term offtake agreements to EV Battery Material Precursor Plants in the U.S. and Canada.
The North American EV Battery Manufacturing Sector is experiencing explosive growth. Since the enactment of the U.S. Bipartisan Infrastructure Law and the U.S. Inflation Reduction Act, there has been an enormous wave of North American EV battery cell manufacturing projects being announced. These projects represent more than US$92bn of EV battery manufacturing capacity. Most projects are scheduled to begin production between 2025 and 2030.
The U.S. Department of Energy estimates that North American EV battery manufacturing capacity will increase from 55 GWh/year in 2021 to 920- 1,000 GWh/year by 2030, a CAGR of approximately 36.75%.
Our new processing facility is expected to be the first solar-powered cobalt processing facility in the United States. Moreover, with an expected annual capacity of 7,000 tonnes of cobalt, our new processing facility is expected to be able to meet 40 percent of the expected 2027 cobalt demand in relation to U.S.-domestic production of electric vehicles.
EVelution Energy is expected to start construction of its cobalt processing facility in 2024 and intends to become operational by the end of 2025 or the beginning of 2026.
Best-in-Class Green Facility
Fully Solar Powered:
Our processing facility will be fully powered by our own 28.4 MW (peak) solar power arrays, with excess power during the day being used to recharge our battery storage and/or being resold to the local power utility.
Solar power will heat the water and process solutions for hydrometallurgical cobalt processing. This heated solution will be stored at temperature in large storage tanks overnight. Using solar power rather than propane or natural gas will further reduce our carbon-footprint.
Solar electricity will be stored overnight in electric battery storage units. Battery storage will further reduce our overnight power requirements from the local utility.
Using & recycling our own water
Water for our processing facility will be sourced from aquifers running under our property, using hydraulically separated artesian wells 1,000+ feet deep. Our water usage is therefore not expected to impact the surrounding area’s water table/ groundwater.
A water treatment plant will treat and recycle approx. 70% of water used. Recycling will minimize new water usage and disposal of used water onto our land.
No on-site tailings & minimal dust
Tailings will be collected, transported and safely disposed of at a licensed local landfill located less than 20 miles away. Not installing tailing ponds on our facility minimizes risk of potential contamination of our own or surrounding land.
Materials will be unloaded, processed, stored and loaded inside our closed facilities, using state-of-the-art air filtration systems. Such control measures will minimize the release of dust or other air contaminants from our operations.
Commitment to Net Zero Emissions
We believe we have a responsibility and opportunity to play a leading role in the U.S. economic transition to net zero emissions. We plan to design and operate our processing facility and certify our cobalt sulfate production as carbon neutral.
We will strive to:
- measure and report greenhouse gas emissions annually;
- implement decarbonization strategies in line with the Paris Agreement, such as efficiency improvements, renewables, and designing for circularity;
- power our operations (on a net annual basis) with 100% clean, renewable energy through the use of our own solar power arrays; and
- take actions to remove any remaining emissions and/or neutralize them with quantifiable, real, permanent, and socially beneficial offsets to become carbon neutral.
We will apply sustainable practices across all facets of our business:
- Operations. We will use resources efficiently and thoughtfully and use science-based targets to improve how we operate. We plan to use adaptive-reuse construction practices, efficient energy management across our facilities, recyclable or reusable shipping materials at our plant, and streamlined logistics across our distribution channels.
- Manufacturing. Our carbon neutral goal requires a commitment to manufacturing innovation. We intend to work with our suppliers and supply chain partners on ethical sourcing practices and we will audit waste streams to identify how to use materials more responsibly.
Commitment to Responsibly Sourced Cobalt
We believe we have a responsibility to source the cobalt that we process in a socially responsible manner. We are committed to the ethical and responsible sourcing of cobalt in an effort to promote the respect of the human rights of the people employed and/or affected by our cobalt supply chain.
As a result, we have enacted our own Responsibly Sourced Cobalt Policy to reinforce our commitment to a responsible and transparent cobalt supply chain including a commitment to strive to source cobalt from companies that comply with the guidelines of the Responsible Minerals Initiative (“RMI”) and the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (“CAHRA”).
We are committed to responsible sourcing and aim to identify and mitigate human rights abuses, child labor and other social risks in our supply chain and therefore our Responsibly Sourced Cobalt Policy provides that we intend to exercise commercially reasonable efforts to:
- know, and require that each of its suppliers, disclose to us the sources of cobalt used in their products;
- avoid and/or mitigate procurement of products containing cobalt obtained from sources that fund or support inhumane treatment in CAHRAs;
- avoid and/or mitigate procurement of any cobalt from companies or sources that do not comply with the RMI and/or OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from CAHRAs.
Facility Located in a “Qualified Opportunity Zone”
Our processing facility is located in a Qualified Opportunity Zone (QOZ) in the State of Arizona, identified as Qualified Opportunity Zone No.: 0427011202.
The Opportunity Zone Program was established by the U.S. Tax Cuts and Jobs Act of 2017 to provide major tax incentives for private, long-term investments in economically distressed communities.
QOZs offer tax benefits to U.S. investors who elect to temporarily defer tax on eligible capital gains, if they timely invest those eligible capital gain amounts in a Qualified Opportunity Fund. Potential Tax benefits include:
- deferment of capital gains on funds invested until the end of 2026;
- no capital gains tax on returns if the investment is held for more than 10 years due to receiving a stepped-up basis to fair market value at sale after 10 years;
- no income tax on dividend distributions to the extent of investor’s allocated basis in the debt of the Company and/or the annual allocated depreciation of the book value of the processing facility; and
- no depreciation recapture on the sale of any investment.
Investment in an Economically Disadvantaged Area
The Facility is expected to have a major economic impact on the local economy, an economically disadvantaged area in Yuma County Arizona, designated as a Qualified Opportunity Zone. Our solar-powered processing facility is expected to generate more than 360 well-paid jobs over the life of the project. Furthermore, our solar power plant will supply not only all of our own power needs but is also expected to support the surrounding agricultural community with clean power at an affordable cost (Yuma being the sunniest county in the U.S. and thus allowing reliable base load solar power supply).
The U.S. Government and the State of Arizona are heavily incentivizing private industry to build EV infrastructure facilities. Several leading EV manufacturers, such as Lucid Motors and Nikola Motors, have already established their headquarters in Arizona. The U.S. Inflation Reduction Act, recently introduced in August 2022, also offers tax credits and incentives for automakers using battery metals produced domestically. Additionally, the U.S. Tax Cuts and Jobs Act of 2017 offers major tax incentives for investments in Qualified Opportunity Zones where many of these facilities are being located. Finally, the U.S. Department of Energy’s Loan Program Office is offering low interest loans to U.S. companies under the Advanced Technology Vehicles Manufacturing Loan Program (ATVM Program) to incentivize the construction of manufacturing facilities in the U.S. to produce Electric Vehicles, EV Batteries and qualifying components and materials like Battery-Grade Cobalt and Nickel Sulfate.
Supply Management and Product Diversification
EVelution Energy intends to utilize its international network, and will enter into strategic partnerships, to supply the growing demand for EV-battery materials primarily in the U.S. and Canada, but also potentially in Japan, Korea, and Europe.
It will also use its knowledge of industry growth in EVs and the EV Battery Demand to potentially expand capacity into EV battery recycling and additional processing production for other EV battery-grade metals such as Nickel Sulfate
Our Facility is strategically located near the border with California. As a result, we are well positioned to potentially recycle EV batteries from electric vehicles that reach the end of their product lifespan (EV batteries are quite heavy and expensive to transport long distances).
California has the largest production and use of EVs in the United States, as California was the birthplace of the first mass produced EVs made by Tesla. The oldest electric vehicles are predominantly located in California and therefore their batteries will be in need of recycling the soonest.
The excess land around our Facility can be used to build an EV battery recycling facility and/or a Nickel Sulfate Processing Facility in the future.