Rossouw to make NextSource ‘Xstrata of battery metals’

Rossouw was CFO of Xstrata Alloys between 2011 and 2013, a bit of history that proved decisive when he was headhunted from Sasol in April this year where he had been CFO for just over two years.

“I was happy there,” says Rossouw. “When I was headhunted I said I wasn’t interested in a CEO role, but they said a gentleman called Sir Mick Davis was involved. So I said: ‘OK, tell me about it.’ The bait was thrown.”

NextSource has only one asset, the recently commissioned Molo graphite mine in Madagascar, which supplies its own pilot anode battery facility in Mauritius. But as Rossouw says, quoting Davis: “Think big but act small.” In other words, Molo is the first step in building a diversified critical minerals company with downstream capacity.

The diversified mining model has lost its cachet in recent years, as evidenced by the streamlining strategies of BHP, Glencore and, more recently, Anglo American. Investors seem to prefer an uncomplicated exposure to single commodities. As a result, pure copper plays tend to command a premium over portfolio miners. Rossouw, who led Investec Asset Management’s mining team as the frontier and emerging markets fund manager, has a slightly different mindset.

When I was headhunted I said I wasn’t interested in a CEO role, but they said a gentleman called Sir Mick Davis was involved. So I said: ‘OK, tell me about it.’ The bait was thrown – Hanré Rossouw

“With the fragmentation that one sees in the battery metals industry, it’s very difficult for capital allocation. The power of diversification and the derisking of your commodity cycles, especially in this world where these markets are prone to manipulation and extreme movements in price, will be a proposition for the likes of an LG or a Tesla or a Volkswagen to be a partner of choice.

“That ultimately is the proposition,” says Rossouw, who is keen not to be teed up as the guy behind an ‘Xstrata 2’. NextSource’s strategy does seem to resemble Xstrata’s remarkable rise to prominence during the so-called supercycle, however. “Let’s not go there,” says Rossouw when comparisons are drawn between the previous cycle in commodities and what’s going on now. But he says he supposes the company is endeavouring to be “the Xstrata of the battery metals industry” — with one important caveat.

“I’m not Mick’s man,” he says. Though Davis is chair of NextSource, his investment vehicle, the privately held Vision Blue Resources (VBR), is not a holding company. Vision Blue won’t be setting up investments for NextSource. It has a 47% stake in NextSource, and while recognising the significant benefits of having a supportive shareholder in VBR and Davis as chair, Rossouw says he will act in the interests of all its shareholders.

Madagascar graphite project

At the time of speaking, Rossouw was less than a week in the job. His first goal is quite clearly to build up Molo to its first phase nameplate capacity of 17,000t a year of large and small flake graphite (the latter trademarked SuperFlake for the electric battery vehicle market). Large flake graphite has an existing industrial market which NextSource will supply through agreement with ThyssenKrupp, the German steelmaker and engineering company.

But the sizzle on the steak is the EV market. From a forecast 1.4Mt this year, flake graphite demand is expected to grow to about 5Mt 10 years later, driven mostly by electric mobility.

Unlike the options in the chemistry in the cathode part of the battery, where there’s debate over which minerals will come to dominate the technology, graphite is the mineral of choice for 95% of the anode manufacture.

I believe we would be open to consider South Africa. If you look at the investment environment, it is changing significantly – Hanré Rossouw

Downstream anode component production is key to NextSource’s ambitions, especially given China’s control over raw materials. Rossouw says he’s prepared to look at other possible locations for an anode battery facility, even though the pilot plant is building up in Mauritius. Discussions have been held with Saudi Arabia and the United Arab Emirates, he says.