- FREYR’s Board of Directors has sanctioned construction of Giga Arctic (combined Gigafactories 1 & 2), the company’s first battery manufacturing facility under development in Mo i Rana, Norway
- FREYR is increasing the nameplate capacity of Giga Arctic to 29 GWh in response to improving battery supply-demand dynamics, ongoing commercial success, significant progress in developing supply chain channels for key raw materials and equipment, continued technical and product improvements, and project financing visibility
- Earlier today at FREYR’s development site in Mo i Rana, the Norwegian Government outlined its National Battery Strategy, which includes significant support from Export Finance Norway (“Eksfin”) to assist FREYR with project financing of Giga Arctic
- FREYR has identified total debt financing support of over $1.6 billion based on visibility from export credit agencies, multilateral development finance institutions and commercial banking partners, exceeding management’s leverage target for the $1.7 billion estimated total capital cost for the expanded Giga Arctic project
- FREYR intends to contract approximately 50% of Giga Arctic’s capacity to long-term offtake partners and reserve the remaining volumes to address exponentially growing market demand, providing annual revenue generating capacity of $2 billion upon optimization of production systems and cell chemistry
- Giga Arctic is expected to be one of the largest and most efficient battery facilities in Europe, with 50% lower anticipated capital spending per GWh of nameplate capacity and more than 200% higher production per employee than conventional Lithium-Ion battery plants in production today
- FREYR is raising its installed annual production capacity target to more than 200 GWh by 2030, twice the company’s previous ambition
- FREYR has recently secured a conditional offtake agreement (“COA”) with a major European energy technology customer for 25 GWh of battery cells from 2024 to 2028, in addition to the more than 100 GWh of previously announced COAs
FREYR Battery, a developer of clean, next-generation battery cell production capacity, announced that the company’s Board of Directors (“The Board”) has approved the expansion of the planned Giga Arctic project under development in Mo i Rana, Norway, to an annual nameplate capacity of 29 GWh. FREYR’s Board of Directors has also approved the construction of Giga Arctic. The approval follows substantial completion of detailed plant engineering; the establishment of procurement frameworks with key raw material and capital equipment suppliers; and the announcements of conditional offtake agreements totaling more than 125 GWh from the planned start of production in 1H-2024 through 2030. Groundworks at the site are well advanced and the company has recently started casting foundation structures.
The Board’s decision coincides with the announcement of a letter of intent indicating loans and/or guarantees of up to €400 million from Eksfin, Norway’s export credit agency (“ECA”), and the recently announced National Battery Strategy by the Norwegian Government, which outlines meaningful governmental support for the developing battery industry in Norway.
“If we are to reach the goals in the Paris agreement, batteries will need to be produced in a more sustainable way with the lowest CO2 footprint possible. It is therefore important for Norway to define a clear direction and set ambitious goals for battery production in our country. The National Battery Strategy that we just launched, defines ten areas of key importance that will facilitate private investments so that companies along the entire value chain can set up sustainable and successful businesses in Norway. Our unmatched access to renewable energy makes batteries produced in Norway the greenest in the world. I am therefore very pleased and excited that FREYR Battery is moving along with its plans to establish a Gigafactory in Norway based on state capital and risk relief. It is an important confirmation that public and private partnerships are important to be successful in creating the green industry of the future,” said the Minister of Trade and Industry, Jan Christian Vestre.
“Today marks another significant milestone for FREYR on our path to giga-scale production of clean battery solutions. With our expanded plant capacity, accelerating commercial momentum, and strong support from Eksfin, other ECAs and financial institutions, Giga Arctic represents one of Norway’s largest industrial investments onshore in recent decades,” said Torstein Dale Sjøtveit, Founder and Executive Chairman of FREYR.
Governmental Support and Gigafactory Financing Plan
Today, the Norwegian Government announced the key elements of its National Battery Strategy at FREYR’s facilities in Mo i Rana, Norway. With the expected financial backing catalyzed by this strategy and support from other European governmental entities, FREYR has identified over $1.6 billion of potential debt financing support to fund development of Giga Arctic, including:
- A letter of intent received from Eksfin indicating loans and/or guarantees of up to €400 million;
- Anticipated loan guarantees exceeding $800 million from ECAs of three OECD countries based on capital equipment order frameworks for Giga Arctic from the same plant equipment suppliers to FREYR’s Customer Qualification Plant;
- Indications of support received from multilateral development finance institutions, which include potential loans of $300 million from the European Investment Bank (“EIB”) and $50 million to $100 million from the Nordic Investment Bank (“NIB”), respectively; and
- Targeted project financing from a consortium of commercial banks led by initial mandated lead arrangers Societe Generale and DNB, which are now formally launching the project financing process.
In addition, FREYR had $523 million of cash on its balance sheet as of March 31, 2022, and currently has multiple grant applications pending decision.
Tone Lunde Bakker, Chief Executive Officer of Eksfin, added, “Export Finance Norway's most important task is to offer capital and risk relief to the green, Norwegian export industry. Long-term partnerships between state and private capital are needed to realize the transition to a zero-emission society; create local jobs; and take leading positions internationally. FREYR Battery’s factory can play a key role in building a powerful, high-tech value chain within batteries in Norway and the Nordic countries. Eksfin has therefore indicated participation in the financing of the project in collaboration with other financiers and investors. We wish FREYR good luck in the next, exciting phase and look forward to working closely with the growing Norwegian battery industry.”
Giga Arctic Development
The sanctioned Giga Arctic construction project includes eight production lines, a battery testing center, administrative facilities, and infrastructure at an estimated total capital cost of $1.7 billion. The updated cost relative to FREYR’s initial business plan, which was finalized in February 2021, is attributable to the following:
- A 150% increase in nameplate capacity on a chemistry equivalent basis to 29 GWh from the initial plan to construct two smaller Gigafactories in Mo i Rana1;
- Technical modifications and enhancements to the plant and its products that are intended to improve operational efficiency and economic returns; and
- Inflationary pressures and supply chain challenges.
FREYR has engineered and positioned Giga Arctic to be the most capital efficient battery plant in Europe, with 50% lower estimated capital expenditures per installed GWh of capacity compared to plants currently in operation or under construction. The company also expects Giga Arctic to be the most operationally efficient battery plant in Europe, generating an anticipated 200% higher production per plant employee compared to estimated averages at conventional Lithium-Ion battery facilities. These expected efficiencies are aided by FREYR’s recently announced long-term power purchase agreement (“PPA”) with Statkraft. Giga Arctic is expected to benefit from 100% renewable energy at prices that FREYR estimates to be substantially below those of other battery producing regions, while using less energy in production through the 24M Technologies SemiSolidTM cell manufacturing process and platform.
FREYR is also evaluating additional enhancements to the Giga Arctic development that include module and pack manufacturing, recycling and other applications which could add approximately $250 million of additional capital expenditures. Management expects the above investments to generate highly accretive returns on capital for the project should the company move forward with these initiatives. In addition, the company continues to evaluate its proposed joint venture with Aleees for a Nordic LFP cathode materials manufacturing plant.
Tom Einar Jensen, FREYR’s Chief Executive Officer, concluded, “Since our NYSE listing in July 2021, FREYR has made incredible progress on its goal of providing clean battery solutions to the world through speed, scale, and sustainability. Despite supply chain challenges and inflation, the fundamentals have never been better for the battery industry given the largest secular shift in human history towards the energy transition to address the climate emergency; the immediate need for energy security, localized power generation and storage; and the accelerating adoption of electric vehicles and battery energy storage systems. FREYR is playing a key role in addressing energy cost inflation, energy security and climate change.”