By some estimates, the global market for graphite - a naturally occurring form of carbon that converts to diamond under high pressure and temperatures - is set to exceed $30 billion by 2027.
It is predicted to grow at around 5.3% per year and has a surprising number of use cases - graphite is used in pencils, lubricants, batteries, solar panels and steelmaking.
Graphite occurs naturally in the earth’s crust, in three different forms: high-grade metamorphic rocks as disseminated crystal flakes; in veins or fractures as vein graphite; and in thermally metamorphosed coal deposits as amorphous graphite. It can be mined by both open pit and underground methods.
It is also in the news of late, following an announcement by the Western Australian Government of $2 million in funding to establish the state’s first graphite processing plant.
Graphite growth
Graphite’s growing usage is well outlined in a report by Mordor Intelligence, which reports a significant increase in steel production in Asia and the Middle East.
“Graphite electrodes are currently the only products available that have high levels of electrical conductivity and the capability to sustain the high levels of heat generated in an electric arc furnace for producing steel,” it says.
“The other important application for graphite in the steel-making industry (in high-purity synthetic graphite form) is as a carbon raiser additive.
“This market consumes a significant portion of the graphite market and drives market growth to some extent.”
Mordor also points to its growth in the field of batteries, where graphite is a key element in the manufacture of lithium-ion batteries and fuel cells.
“Batteries are one of the few applications where natural and synthetic graphite compete with each other,” Mordor says.
“Synthetic graphite is costlier than natural graphite, which is encouraging battery manufacturers to shift their focus toward natural graphite.”
Graphite in Australia
That’s good news for the handful of Australian graphite players with projects at varying stages that should interest investors.
In 2017, Geoscience Australia estimated that there were 7.14 million tonnes of Economic Demonstrated Resources (EDR) below our feet, an astonishing 636% increase on previous estimates dating back to 2013.
That increase has been driven by renewed interest and exploration of the material, thanks to its suitability for battery technology.
BlackEarth Minerals
BlackEarth Minerals NL (ASX:BEM) is a vertically integrated graphite developer with advanced mining projects in Madagascar and base metal prospects in Western Australia.
It recently concluded a successful pilot at its flagship Maniry Graphite Project in southern Madagascar, resulting in very high yields and coarse flake production results - in fact, the project hosts some of the world’s highest-grade, large and jumbo flake graphite products.
“Not only are the results better than we had expected, they also validate our developed strategy to build a plant that can produce high-grade graphite concentrate to meet the expanding demand for graphite,” BlackEarth managing director Tom Revy said.
“Additionally, Maniry graphite, once produced on a commercial scale, will immediately feed our proposed expandable graphite production plant in India and also be available to meet the demand from EV manufacturers and their supply chain.
Volt Resources
Volt Resources Ltd (ASX:VRC) has been generating plenty of news headlines in recent months, as it transitioned to become a producer.
It did through an acquisition of a 70% controlling stake in the Ukrainian Zavalievsky Group (ZG) of graphite companies, which has a host of advantages for the $63.7 million business:
- Located in Eastern Europe in close proximity to key markets with significant developments in lithium-ion batteries (LIB) facilities planned to service the European based car makers and renewable energy sector;
- Plans to produce battery anode material using existing graphite production to become a fully integrated supplier to LIB cell makers based in Europe;
- Makes graphite products across the range and has the potential to significantly increase its high-value large flake production;
- Produces a high value ‘green’ purified 99.5% TGC product;
- Long-life multi-decade producing mine that has further exploration upside;
- Existing customer base and graphite product supply chains which Volt expects to be able to leverage in developing its existing Bunyu graphite project in Tanzania;
- Excellent transport infrastructure covering road, rail, river and sea freight combined with reliable grid power, ample potable groundwater supply and good communications;
- An experienced workforce that can assist with training, commissioning and ramp-up for the Bunyu graphite project development;
- Potential to generate material cashflow which could make Volt internally funded for corporate costs and working capital into the future;
- Co-products of quarry stone for the domestic market and garnet for the European market that could generate material cash flow for relatively low capital; and
- A 79% interest in 636 hectares of freehold land, with the mine, processing plant and other buildings and facilities located on that land
Walkabout Resources
Walkabout Resources Ltd (ASX:WKT, FRA:N6D) is on the verge of receiving all the funding it needs to bring its flagship Tanzanian-based Lindi Jumbo Graphite Project into development and production.
It recently appointed Tony Allen to the role of chief financial officer, effective from July 19, coinciding with the company completing companion equity requirements to enable the drawdown of its US$20 million project debt with CRDB.
“With expertise and technical knowledge in all aspects of operations, corporate finance, financial planning, taxation and accounting, I believe Tony is a great addition to our executive team as we look forward to the development and operations of the Lindi Jumbo Graphite Mine and the growth options that provides,” Walkabout CEO Andrew Cunningham said.
Comet Resources
Comet Resources Ltd (ASX:CRL) owns the Springdale Graphite Project in Western Australia.
At present, it is conducting graphite flake test-work, with production of the bulk sample of graphite concentrate completed in the June quarter.
The concentrate was sent to a specialist facility in Germany where test-work has commenced to assess amenability to produce battery anode material suitable for use in EVs.
“We now have material for testing in Germany, both for ourselves and a third-party producer of anode material,” Comet managing director Matthew O’Kane said.
“The results of these test-work programs will determine the suitability of Comet’s natural flake graphite from the high-grade zone at Springdale for use in the manufacture of battery anodes for electric vehicles.
“With the continued push towards an electrified transport network, demand for these graphite products is expected to continue to grow.”
Marvel Gold
As the name suggests, Marvel Gold Ltd (ASX:MVL) is focused on gold but is spinning out its Tanzania-based Chilalo Graphite Project under the new name of Evolution Energy Minerals Ltd following an IPO.
Marvel recently secured the backing of prolific German-based junior resources investor Delphi Unternehmensberatung AG as part of a A$4.2 million capital raise.
“The placement price demonstrates the deep value potential in our gold and graphite assets, with the value of our graphite assets soon to be unlocked by our proposed spinout of the Chilalo Graphite Project, which has the potential to be highly value-accretive,” managing director Phil Hopkins told investors.
The spinout of Chilalo is in the advanced stages, pending only final in-country regulatory approvals.
In a key development, a share exchange agreement (SEA) has been executed under which Marvel has agreed to sell the Chilalo Project to Evolution in exchange for Evolution Energy shares valued at A$10 million.
- Daniel Paproth