Mining

Madagascar's Molo Graphite Mine to Expand with IFC Support

Madagascar's Molo Graphite Mine to Expand with IFC Support
Monday, 17 June 2024 16:55

Madagascar’s Molo graphite currently produces 17,000 tonnes per year. NextSource Materials, the owner, wants to increase this capacity to 150,000 tonnes a year by investing $162 million. It recently announced the IFC's support for the project.

The Molo graphite mine will see its production capacity rise from 17,000 tons to 150,000 tons per year, with a $162 million investment. Last week, the International Finance Corporation (IFC) said it would back the project.

The World Bank’s private sector arm signed a mandate letter to lead a senior credit facility totaling $91 million to finance Molo’s development.  NextSource Materials disclosed the deal on June 13.

The move should help expand Molo’s production capacity to 150,000 tons of graphite annually, against 17,000 tons now. Madagascar’s biggest mine would thus produce more than all active projects on the Island. This would put the country on par with the world’s biggest graphite producers, such as China, Mozambique, and soon Tanzania. 

“This partnership underscores the confidence placed in NextSource’s Molo mine expansion by one of the world’s leading development finance institutions. With IFC’s support, we are poised to unlock Molo’s vast potential and further contribute to long-term sustainable development in Madagascar,”Craig Scherba, CEO of NextSource, commented in a statement.

In the same source, the Canadian firm Dans son communiqué, NextSource added that the IFC would collaborate with other commercial banks and financial institutions to raise the funds.

The credit facility is expected to provide around 50% of the project's capital costs, estimated at $161.7 million. Due diligence before the signing of a definitive agreement has already begun and is expected to be completed in the first quarter of 2025.

In its latest report, the Extractive Industries Transparency Initiative (EITI) revealed that the extractive sector accounts for around 5% of GDP and 32% of exports in Madagascar. Meanwhile, the country’s central bank reported that Graphite accounted for just 1.1% of Malagasy exports in 2021, value-wise.  This share should rise as projects as more projects like Molo are developed.

Emiliano Tossou

 

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