BlackEarth Minerals NL (ASX:BEM) had advanced its downstream graphite processing joint venture with the development of an Expandable Graphite Plant set to begin in the Pune region of India.
In a key step, the JV between BEM and Metachem has appointed leading local engineers, Shubhjyot Consulting Engineers Pvt Ltd, to oversee the development of the plant with the JV partners committed to fast-tracking the plant’s development.
The JV plans to develop a plant that in the initial stage can produce 2,000-2,500 tonnes per annum of expandable graphite and then expand capacity to 4,000-5,000 tonnes.
Robust economics
Stage 1 development costs, including land, building and all capex, is scheduled to be US$3 million with gross revenue projected to be US$7 million in the first full year of production, growing to US$18- US$20.5 million annually following plant expansion.
BlackEarth has completed a feasibility study to assess the robust commercial terms and all other factors relevant to the JV and a final investment decision has been approved by the company’s board.
Key project outcomes on a 50:50 JV basis, include:
- NPV (post-tax): US$78 million.
- Net cash flow (pre-tax): US$219 million.
- Payback period (post-tax): 1.2 years.
- Project capex: US$3 million (first stage).
Site in Pune SEZ
The JV partners have acquired a 5-acre site in the Special Economic Zone in Pune, India, with settlement scheduled to occur on July 30, 2022, following an extensive review.
This JV will be known as Panthera Graphite Technologies Pvt Ltd with branding and website development launched in the next few weeks.
Site development is expected to begin in September 2022, with planned completion in early 2023 and trial processing to be undertaken immediately thereafter.
Expandable graphite offtake
The JV plans to commence the supply of expandable graphite in the second quarter of 2023 with a binding offtake agreement secured to sell all initial production to global graphite downstream processing leaders, Grafitbergbau.
Metachem has been producing expandable graphite and supplying products into the worldwide market for a number of decades. They have a strong business model which provides a degree of commercial security to the JV.
BlackEarth’s team will manage the marketing and sales of products, utilising its strong logistics and global marketing network.
The JV has secured a licence agreement with the JV operators for the forecast life of operations with largely local labour to be employed while a CEO and local management team will be appointed and this process is in the final stages.
Strong demand for expandable graphite
Expandable graphite is one of the fastest growing markets along with lithium-ion batteries. It is the only graphite market to have experienced price increases over the last couple of years and is largely based on jumbo and large flake material.
Development of expandable graphite involves treating flake graphite and heating it to cause the flakes to split apart, expand and increase hundreds of times in volume.
This material is pressed into sheets to create a foil which can be cut into shapes and used in many applications including consumer electronics, high-end gaskets that are heat and corrosion resistant, fire retardants, smart building products, flow batteries and fuel cells.
Market shortages
Because of the growth in demand, and declining production from Shandong Province, China, there are now shortages of large and jumbo flake concentrates. Prices and margins for expandable graphite are high and expected to grow further as demand increases.
Rapid demand growth is also forecast due to the increasing use of high energy density batteries in mobile devices.
Amid the COVID-19 crisis, the global market for expanded graphite was estimated at US$203 million in the year 2020 and is projected to reach a revised size of US$352 million by 2027, growing at a CAGR of 8.2% over the period.