Quantum Graphite has executed a binding offtake agreement with Swiss-based global metal and minerals trader MRI Trading for the sale of 100 per cent of all of the flake graphite produced at its Uley 2, Stage 1 project in South Australia, for a period of five years.
A leading global metals and mining trading group based in Zug, Switzerland, MRI is uniquely positioned to add flake graphite seamlessly to its existing minerals coverage and provide the Quantum with ready access to MRI’s customer base across Europe and Japan.
The head of MRI’s Japanese commercial team, Andrew Briscoe, said the synergies with Quantum were “compelling”.
“Our due diligence showed us the obvious overlap in both the key markets and key customers. The icing on the cake is our logistics fit in Australia and the Asia- Pacific region generally. Our diversified freight capabilities offer options beyond the company’s reach and deliver a clear competitive advantage.”
Quantum worked closely with MRI’s head office in Zug on the strategic fit of the organisations.
Senior member of MRI’s management, Tristan Zaniewicki, said the company recognised that through this deal, it would become the largest trader of natural flake outside of China.
“Once we satisfied ourselves of Quantum’s technicals and its diverse product coverage, our focus was culture. As the exclusive Uley 2 offtake partner, the parties will work closely together and with prospective customers. Our cultural fit was critical and we were pleased to work with a board that have the same mindset,” he said.
Quantum managing director Sal Catalano said the parties were acutely aware in negotiations that the agreement had to extend well beyond a simple minerals supply arrangement.
“Emerging thermal storage technologies, the explosive demand forecast for Li-ion battery production and the changes to the existing supply chain paradigm, required an agreement structure that would cope with rapid change in the marketplace,” he said.
The parties have agreed that the market price methodology will include a two-step process that utilises data from these established data providers.
The first step is the determination of the prevailing market price for the relevant flake specification. This agreed market price is obtained directly from the schedule of prices published by market data providers strictly limited to those specified in the offtake agreement.
Where a price is not available for a particular specification of Uley 2 flake, the market price adopted will be that applicable to the flake specification closest to the relevant Uley 2 flake product.
The second step of the pricing methodology is the determination of the final selling price by the application of an agreed premium or discount to the agreed market price.