Evion Group NL (ASX:EVG, OTC:EVIGF) is in the final stages of a testing and production ramp-up period at the newly constructed expandable graphite facility in India, with the joint venture (JV) operational team now planning for full production.
The operation – Panthera Graphite Technologies or PGT – is a 50–50 JV between Metachem Manufacturing Company Pvt Ltd and Evion.
Steady increase in production
It is anticipated that production will steadily increase over the next few months and achieve full production capacity of at least 150 tonnes of production in the short term.
Plans are also being made for a further expansion to scale to satisfy strong demand for Evion’s high-quality expandable graphite project.
Evion managing director David Round said: “We’re delighted with progress of our JV operations in India over the last few months.
“There has been a substantial amount of testing and refining to production processes to ensure we produce a range of premium products to meet the ever-growing demand for our product.
Potential buyers around the world
“Apart from selling to Europe, we have extensive enquiries from buyers in the USA and Asia and this gives us great confidence that we should move forward and increase the plant’s production output.
“I plan to be on site over the next few weeks and look forward to publishing an extensive release and videos demonstrating the potential for this world-class downstream graphite facility.”
PGT has assembled a highly experienced management and operational staff to drive the success of its expandable graphite operations.
Supported by the Evion team, PGT management will focus on the acquisition of graphite concentrate and the sales of material to Europe and other prospective markets.
This collaboration ensures that the JV benefits from a wealth of expertise and strategic support, positioning it well for growth and success.
The JV is concluding fixed-price contracts for the acquisition of much of the graphite concentrate needed to meet production demands over the next 12 months.
These contracts are expected to secure prices within forecasted ranges, providing substantial security of return to the JV.
What’s more, the JV is negotiating updated sales prices and volumes with current and new buyers, aiming to expand its market reach to the USA and Japan.
This strategy will diversify sales channels and enhance fixed sales contracts, ensuring a strong cash flow over the coming year.
China ban will increase demand
China’s export controls on natural graphite, implemented in December 2023, have had a big impact on the global graphite market.
The restrictions, which began at the start of the month, have tightened China’s grip on the supply of minerals essential to advanced manufacturing.
As a result, reductions in exports continued through the first quarter of 2024, leading to increased prices for graphite concentrate and many downstream produced materials.
The Chinese export ban is likely to result in a substantial increase in demand for graphite material from other markets capable of supplying world-class material at competitive prices.
As these markets fill the gap, the JV's strategic positioning and established contracts will allow it to capitalise on the rising demand, ensuring robust returns and market stability.
“We are now likely to see a disruption in supply chains and sharp increase in graphite prices,” Round continued.
“And this comes after prices had dropped to an 11-year low, down over 50% year on year during June 2023. So the potential for a powerful bounce in the prices for graphite off oversold levels is high.
“Over the longer term, natural graphite and active anode material (AAM) demand is expected to increase four and eight times, respectively, over the next 10 years*.”
*Source: Jason Hamlin, Nicoya Research, November 2023.