- Australian firm Magnis wins deal to supply Tesla’s graphite
- Magnis subsidiary to mine under Special Economic Zone license
- Tesla to import in excess of 17000 tonnes of graphite annually
Tesla, the American multinational automotive company and the World’s leader in electric vehicles, is expected to benefit from Tanzania’s graphite through a supplier that has been given mining rights to export 17,500 tonnes of graphite annually as of 2025.
Despite the ‘lack of official communication from Tesla’ local media reports that a third party, Magnis Energy Technologies Ltd, has in fact entered into a ” …fixed pricing Binding Offtake Agreement with Tesla, Inc. for the supply of Anode Active Material (AAM) that will commence in February 2025.”
Confirming the pact was Magnis Chairman, Frank Poullas, who expressed his company’s excitement over the Tesla deal.
“We are really excited to bring our high-performing AAM to a market that requires no chemical or thermal purification throughout the whole process, which differentiates this sustainable material in the market and provides great value to all parties,” said the visibly excited Magnis Energy Technologies Ltd.
Graphite is one of the components used in EV batteries which Tesla needs to secure steady supply to keep the engines running.
The actual miner on the ground will be Uranex Ltd. a subsidiary company under the Australian miner Magnis Energy Technologies. Uranex holds a Special Mining License No. 550/2015 under the jurisdiction of the Tanzania Ministry of Minerals.
Under this mining license, Uranex ltd will be operating what is dubbed the ‘Nachu Graphite Project,’ located near the Ruangwa region in the south-east of Tanzania. This comes after Syrah Resources, with expansive graphite mines in Mozambique, signed a deal with Tesla.
In effect, Magnis Technologies Tanzania Limited (MTT), through its Tanzanian subsidiary Uranex Tanzania Limited owns a 100% interest in the Nachu graphite project. The Nachu processing plant will operate under MTT, a wholly-owned subsidiary of Magnis, operating in a Special Economic Zone (SEZ) license area.
Approximately 220km away from the mushrooming port of Mtwara, the Nachu Project demonstrates significant potential due to its large size; “…an orebody with very low variation in lithology and mineralization and low-cost operational model,” as Magnis describes it.
According to figures in the local publication; “Under the agreement, Tesla will purchase a minimum of 17,500 tonnes starting from February 2025 with a maximum of 35,000 tonnes for a minimum three-year term at a fixed price.”
The article further explains that the graphite supply deal is on condition that, “…Magnis Energy Technologies Ltd secures a final location for its commercial AAM facility by 30 June 2023, producing AAM from a pilot plant by March 31, 2024, commencing production from the commercial AAM facility by February 1 and customer qualification.”
According to the statement, the development of Pilot Plant facilities for both Nachu Graphite concentrate and AAM has commenced, equipment has been ordered and staff hired.
Magnis is no new entity in Tanzania. As early as 2015, Magnis’ subsidiary, Uranex, secured a Special Mining Licence SML No. 550/2015 from the government of Tanzania for graphite mineral exploration.
Since then, work has been underway to get to the production level and quality that Tesla can export for use in 2025.
As early as 2015, ‘…technical aspects of producing AAM using Nachu graphite concentrate have been developed over a seven-year period at facilities based in New York,’ confirms the government paper article.
Tanzania’s Special Economic Zone
An Export Processing Zone (EPZ) is a customs area where one is allowed to import plant, machinery, equipment, and material for the manufacture of export goods, Tanzania has numerous of these spread across the country to attract investors across multiple sectors ranging from agriculture and manufacturing to mining.
When a company operates in an EPZ, it gets special considerations and exemptions; these include exemption from payment of corporate tax for up to 10 years, exemption of taxes and duties for machinery, equipment, and construction materials for the development of SEZ infrastructure and the exemption from payment of withholding tax on rent, dividends, and interest, also for 10 years.
The Export Processing Zones Authority (EPZA) is the government entity responsible for promoting investments in the Special Economic Zones (SEZs). In 2017, it is the EPZA that granted Magnis its 10-year license to operate within one of the country’s Special Export Zone (SEZ).
Given the fact that it is operating under an SEZ license, Magnis will be able to import and apply advanced technologies to produce value enhanced graphite products at no extra cost or taxes.
Since the legislation provides incentives for companies to create value addition and advance employment, to this end Magnis, operating through Uranex, has prioritized hiring local staff and supporting the communities around the mine site and beyond.
As an Investment Promotion Authority, EPZA provides reliable and relevant information to investors to assist in establishing their investments in Tanzania SEZs, including available investment opportunities and market condition details.
Tanzania’s EPZA offers a wide range of investor support services all under one roof at its Dar es Salaam One Stop Service Center. The Centre provides services such as facilitating investors to obtain factory space or serviced land in or outside the existing industrial/commercial parks.
EPZA also handles company registration processes, and administrative procedures in getting tax incentives and even supports foreigners to obtain visas and work permits. The EPZA also assists investors in logistics for clearing and forwarding of merchandise at the country’s ports and provides useful contacts of key public and private organizations.