GR Engineering Services and EcoGraf have signed a letter of intent (LoI) towards an engineering, procurement and construction (EPC) contract for the development of a graphite facility in Western Australia.

The two companies expect to sign a formal contract for the new 20,000 tonnes per annum (tpa) battery graphite facility.

GR Engineering and EcoGraf are working in partnership towards the completion of pre-development activities for the project.

EcoGraf is also finalising its arrangements with the Western Australian Government’s land development agency over a proposed 6.7ha site in Kwinana.

With a pre-tax net present value of $141m, the proposed development is expected to generate an internal rate of return (IRR) of 36.6%.

The graphite facility is estimated to cost $22.8m (A$33m) for an initial 5,000tpa capacity.

It would attract a further $49.2m to expand battery graphite production to 20,000tpa.

EcoGraf said in a statement: “The project’s forecast economic contribution to Western Australia is significant on both an economic and strategic front, directly employing more than 250 workers during construction and supporting government plans to position Australia as a global leader in the environmentally, ethically and socially responsible manufacture of battery minerals.”

The company has received strong interest from potential customers and is progressing on the sales and offtakes of the product.

In November 2019, Saracen Gold Mines awarded an A$24.5m (16.9m) EPC contract to GR Engineering.

In the same year, OZ Minerals contracted GR Engineering for the design and construction of the Northern Wellfield for the Carrapateena project in South Australia.