Ashley Mastronardi: Joining us now is Eric Desaulniers, president and CEO of Nouveau Monde Graphite, which develops graphite mining and battery material operations in Quebec. Welcome to Taking Stock.
Eric Desaulniers: Thanks for having me, Ashley.
Ashley Mastronardi: All right. So why is building a major source of natural graphite in North America so important right now?
Eric Desaulniers: Yeah, it’s very important. As you pointed out, we are developing today the largest natural graphite operation of all the G7 countries. We just completed earlier this year a $650 million US project financing, with very good shareholders, to build this very large graphite operation to serve mainly the battery material business, but also the steel business, all the defense sector, a very strategic, very important part of our economy. So this is exactly what we’re building, and we’re developing the project for our shareholders and customers in 2029.
Ashley Mastronardi: Practically speaking, in practice, what can graphite power?
Eric Desaulniers: Practically speaking, it is the other part of the lithium-ion batteries. So everybody knows about the cathode and lithium, nickel, cobalt. But what people don’t know as much is graphite is the largest component of a battery. It’s over 1 kg per kWh of battery capacity. So in a Tesla, you have over 100 kg of graphite. And we need a lot of it.
So currently, it’s totally dominated by the Chinese competitor, 100%. And now we are diversifying from this market thanks to customers like Panasonic Energy, and from Italy, the large oil and gas company, like GM, like Mitsui. They are all important partners, shareholders, and customers in this business.
Ashley Mastronardi: And I understand the construction of the Matawinie mine is now underway. What milestones have you hit with that process?
Eric Desaulniers: Yeah. So now we have over 50% of the capital expenditure already committed. It’s on time, on budget. We will start producing at scale 106,000 tonnes per annum of concentrate starting before the end of 2028. So this is very exciting. First time we have a large graphite operation outside China getting built like that in the G7 countries. We have a lot of customers waiting for that strategic material, finally being available for all the different customers.
Ashley Mastronardi: You mentioned China a few times. Can North American graphite compete on costs with China while still maintaining the standards that your customers are looking for?
Eric Desaulniers: Yeah, absolutely. Our cost of production is one of our biggest strengths. We can be around $419 US per ton, the C1 cash cost, while we are selling currently, in our forecast, at around 1,330 US, so about three times higher than our C1 cash cost.
So thanks to two things. We have access to very cheap hydroelectricity in Quebec, Canada. We are very close to our customers, so logistics is minimal as well. And also, we have a high-value product in the right location, where customers are not so price-sensitive. They just need this product for strategic applications, locally sourced. So we can be very competitive.
Ashley Mastronardi: What should investors be looking for in the next five years from your company?
Eric Desaulniers: Yeah. So in the next two or three years, we will finally get the EBITDA up. We are projecting an EBITDA around 100 million to start with, and built on that, we’ll deliver further capacity. We’re planning an expansion in Europe after we’ve built our project in Canada. So we’re very, very active at taking all market share possible while the market needs us, and we have all the great attributes to be successful.
Ashley Mastronardi: What will growth look like, ideally, in that timeframe?
Eric Desaulniers: Yeah. So for us, what is financed and built is about 100 million of EBITDA. However, we have plans to go up to 250 by building further battery material capacity. So about half of the mine output will be transformed into active anode material. So this is a priority.
But also, what we are developing now is optimizing the value of our tailings. That contains a lot of sulfur. That could be an environmental problem, but for us, it is a potential cash flow, producing sulfuric acid and other byproducts. It’s also a priority for us to enhance the value of the Matawinie mine project.
Ashley Mastronardi: All right. Eric Desaulniers, president and CEO of Nouveau Monde Graphite, thank you so much for joining us at the New York Stock Exchange.
Eric Desaulniers: Thank you, Ashley.
