BlackEarth Minerals NL (ASX:BEM) has signed a non-binding MOU with Indian-based company Metachem Manufacturing Company Pvt Ltd to begin plant construction and the production of expandable graphite.
The demand for expandable graphite continues to grow with current and future pricing projections in the range of US$2,800-US$3,500.
BlackEarth and Metachem are investing in a new processing facility to meet demand from European based groups with LuxCarbon to assist with product sales to Tier 1 buyers in Europe.
The companies are working toward executing the JV agreement, following a period of due diligence and discussions, within 90 days and will fast track development to commence production within 9-10 months.
“Groundbreaking agreement for high-value commodity”
BlackEarth managing director Tom Revy said: “This is a groundbreaking agreement between two companies committed to the growth and development of this important high-value commodity to fuel the worldwide demand for downstream graphite products.
“The BEM executive team has been in discussions with the directors of Metachem for some time now and we are impressed with their professionalism, technical expertise and market presence in the world’s largest democracy.
“This planned production site complements our other interests in the USA and Europe, and further positions BlackEarth as a leading provider of graphite concentrate and a range of downstream graphite products over the forthcoming decades.
“Our partner in Europe (LuxCarbon) will play an instrumental role in this development as we, with their support, plan to sell this highly valued product to a range of existing and new buyers in developing and growth markets throughout Europe.
“Both companies are already working toward concluding an operational joint venture agreement within the next few months.”
MOU terms
Metachem is a prominent and leading producer of expandable graphite and other downstream products with 20 years of production experience and sales into Europe, Asia and the USA.
Key elements of the MOU include:
- BlackEarth is to source, in conjunction with their sales and marketing partner LuxCarbon, high-quality graphite concentrate for treatment for the new expandable graphite plant;
- Following completion of its own plant, BlackEarth will provide large and jumbo flake graphite to the JV;
- Each JV partner proposes a 50/50 equity and profit share arrangement with capex estimated to be US$3.5 million in total;
- BlackEarth and LuxCarbon to provide end-user and product technical advice to the Metachem operational team;
- BlackEarth and LuxCarbon will manage sales, marketing and the growth of sales worldwide;
- Estimated initial production to be 2,000 tonnes per annum growing to 4,000 tonnes per annum, with plans to develop other plants in Europe and other strategic locations;
- BlackEarth estimates Gross JV Revenue of US$6.25 million initially, growing to over US$13 million upon production ramp-up to 4,000 tonnes per annum;
- Production sites have been identified and appropriate economic, social and environmental conditions have initially been assessed as highly favourable; and
- The production site is within the Indian Special Economic Zone (SEZ) which offers a range of economic, taxation and other concessions which adds substantially to the project's valuation.
The companies are also committed to additional plant developments in the high growth markets of Europe and Asia.
Expandable graphite demand and growth. Source: Benchmark Mineral Intelligence.
Expandable graphite demand
The global expandable graphite market is expected to grow from US$202.8 million in 2020 to around US$351.9 million by 2027 (according to globalnewswire.com) and this growth and demand for a range of products and applications provide BlackEarth with an enormous opportunity.
Development of a new processing facility will position the company as the first producer of commercial levels of Expandable Graphite listed on ASX.
Expandable graphite is a form of intercalated graphite and is produced by a process in which an intercalant material is inserted in between graphene layers of generally coarse flake graphite in a process referred to as ‘exfoliation’.
Subsequent heating of the intercalated material causes the intercalant material (expandable graphite) to expand and drive the graphene layers of the graphite apart and thus create expanded graphite.
When treated, graphite flakes split apart and increase in volume by up to 300 times, and this ‘expanded graphite’ can be pressed into sheets and used for heat and fire protection in applications ranging from building materials to consumer electronics and fuel cells.
Consequently, expandable graphite has many applications in the construction industry, and also in furniture and textiles, and anywhere where there is a pronounced fire risk.
Rapid demand growth is also forecast due to the increasing use of high energy density batteries in mobile devices.