Traditionally used in pencils, lubricants, crucibles, foundries, polishes and arc lamps, high-purity graphite has found a new market in the electric vehicle boom, becoming one of the largest components of electric vehicle batteries by weight.
Now, with the energy transition in full swing and battery demand skyrocketing, it’s likely a supply dearth will eventuate.
State of the market
While graphite forecasts are not particularly encouraging for 2023, demand for graphite and its end-use products is set to outstrip supply by about 2025.
There has also been a raft of policies internationally to support the uptake of critical minerals and specifically graphite, including the US Inflation Reduction Act, US Bipartisan Infrastructure Law, the EU Green Deal, the Canadian Critical Minerals Strategy and India’s FAME II Strategy.
Analysts forecast a spike in demand and prices for graphite from the rapidly growing EV sectors, which current mines will not be able to meet.
While there are numerous plans for new Active Anode Material-focused natural graphite projects in the post-2025 period, it’s thought forecast strong demand, rising costs and supply constraints will be the catalysts to propel graphite prices higher over the 2023-2025 period.
Furthermore, to receive financial incentives from the US Inflation Reduction Act, battery producers must not use Chinese graphite, further privileging Australian-based companies with assets in friendly jurisdictions.
Small cap movements this quarter
There was plenty of activity in the graphite sector in the June quarter, with several projects moving to the pre-feasibility study phase and beyond in an effort to reach full production.
Evolution Energy Minerals
Evolution Energy Minerals Ltd (ASX:EV1) remained focused on the Chilalo Graphite Project in the quarter, making significant strides in regulatory agreements, offtake arrangements and finding new graphite zones in exploration.
In April, EV1 signed an agreement with the Tanzanian Government that laid the groundwork for the formal ownership, development and management of the Chilalo Project.
This, alongside an updated definitive feasibility study, provided certainty for financing discussions; Evolution received non-binding expressions of interest from major banks to provide finance for the project’s development, including traditional debt/equity financing and discussions with investment funds and private equity groups.
The company also arranged offtake agreements for the sale of coarse flake material, although its more valuable (suitable for battery anode applications) fine flake remains uncontracted – Evolution says this will provide strategic leverage in funding discussions.
Finally, Evolution discovered a new high-grade graphite zone at Chilalo East and Chilalo E2, demonstrating potential to expand the project’s mineral resource even as the company aligns itself with the US Government’s policy initiatives on battery anode materials.
To that end, EV1 also appointed Stacy Newstead as CEO of Evolution’s wholly-owned US subsidiary, Evolution Energy Solutions LLC, to lead the implementation of Evolution’s downstream processing strategy, the key objective of which is to produce lithium-ion battery anode materials in the US.
In the last quarter, Evion Group NL (ASX:EVG) made strides at its Maniry Graphite Project in Madagascar.
The company successfully completed the Environmental & Social Impact Study (ESIA) and subsequently, the ESIA was submitted to One National pour l’Environment (ONE) for approval.
Getting approval from ONE is a crucial step for Evion, paving the way to become a player in the graphite market, especially for the thriving EV and alternative energy sectors.
A standout part of Evion’s community relations was the completion of a local school’s construction and the commitment to continue funding the school, including free medical care for employee families and food donations.
On the operational side of things, the suitability of Evion’s graphite for making battery anode material (BAM) was confirmed through key test work and pre-construction discussions are ongoing.
Joint venture (JV) operations in Pune, India, are progressing rapidly, with prefabrication and civil works in the works in preparation for production later in the year.
From the corporate side, meetings with potential funding and JV partners in the USA took place in June, focusing on the development planning of the Maniry Project and proposed BAM JV plans in Europe. The company also secured $3.4 million in funding in a share placement, resulting in cash reserves of $4.3 million as of June 30, 2023.
International Graphite Ltd (ASX:IG6) advanced its ambition to become Western Australia’s first producer of graphite battery anode materials (BAM) for lithium-ion batteries.
For the Collie Downstream Processing Facilities, the company released a scoping study for a proposed BAM facility.
The proposed plant will process up to 40,000 tonnes per year of graphite concentrate to manufacture up to 17,600 tonnes of BAM and 20,000 tonnes of micronised by-products.
The facility will include uncoated spheroidised purified graphite (USPG) and coated spheroidised purified graphite (CSPG) production lines. A 20-hectare industrial site at Collie has been selected by IG6, with micronising equipment scheduled for delivery in September 2023.
The Springdale Graphite Project continued to deliver, with 12 diamond and 261 reverse circulation (RC) infill and exploration holes drilled for around 20,465 metres generating new discoveries at the Mason Bay and Springdale Central prospects.
The last assays are expected by July’s end, which will be used for a revised mineral resource estimate targeted for late August 2023.
On the corporate front, the Australian Government awarded International Graphite a $4.7 million grant from the Critical Minerals Development Program, with $1.9 million received in June.
Additionally, the company received $0.7 million from the Western Australian Government’s Financial Assistance Agreement, leaving it with $2.7 million in cash at quarter-end. A further $900,000 in R&D funding was received after the quarter ended.
Sarytogan Graphite Ltd (ASX:SGA) launched a pre-feasibility study (PFS) for the Sarytogan Graphite Deposit in Central Kazakhstan during the June 2023 quarter, incorporating on-site drilling and considering different project sizes, locations and flowsheets.
The company engaged in geotechnical and hydrogeological drilling on-site in support of the PFS, collecting data that will inform pit designs and determine dewatering approaches.
In mid-April, SGA signed a key land access agreement, which will include a US$10,000 pre-payment and a lump-sum compensation payment of US$240,000 upon the grant of the mining licence.
The company also began drilling at the Kenesar Graphite Exploration Project during the quarter, seeking to add to the already impressive Sarytogan Deposit inventory of 229 million tonnes at 28.9% total graphitic carbon, an exceptionally high-grade mineral resource estimate as it stands.
On the subject of high-quality graphite, SGA will look to double down on high-purity results from last quarter (which netted 99.87% carbon purity) with bulk flotation concentrate production identified as the critical step to provide the feedstock for further purification and spheroidisation.
SGA has ordered bulk flotation concentrate production from UVR-FIA GmbH and Independent Metallurgical Operations Pty Ltd in two separate runs to mitigate impact on the project schedule, with plans for further purification, spheroidisation and battery testing in the near future.
On the corporate front, SGA recently raised $5 million in a share placement to fund ongoing Sarytogan Graphite Deposit development programs, including the PFS, as well as exploration at Kenesar. The company’s cash reserves sat at $7.8 million as of the end of June.
Sovereign Metals Ltd enjoyed strong support from the mining industry in the quarter, securing a 15% strategic investor in the form of Rio Tinto’s $40 million investment.
The injection of cash included an option for Rio to increase its holding to 19.99% within two months, while the mining giant provides technical and market advice, with a particular focus on spherical purified graphite for the lithium-ion battery anode market.
This investment also represents a strong step in the right direction for SVM’s ambitions to become a major new supplier of low-CO2 natural rutile (titanium) and flake graphite.
The partnership deal received a round of applause from the Malawi Government, with public statements confirming the administration’s commitment to ensuring the growth of the mining sector.
On the technical side of things, SVM is now in the advanced stages of a pre-feasibility study (PFS) for the Kasiya natural rutile and flake graphite deposit, where the company aims to create “one of the world’s largest and lowest-cost producers of natural rutile and natural graphite with a carbon-footprint substantially lower than other current and planned producers”.
Recent downstream test work has also validated Sovereign’s battery metal ambitions, demonstrating “excellent suitability for use in lithium-ion batteries” with an emphasis on near-perfect crystallinity, purity above the benchmark of 99.95% graphitic carbon and a complete lack of critical impurities or deleterious elements.
Looking forward, SVM is moving to bulk sample programs to produce larger volumes of rutile and graphite from Kasiya. Samples will be used for downstream test work and product qualification for the lithium-ion battery sector.
The company held $5.5 million in cash at the end of the quarter.
Volt Resources Ltd (ASX:VRC, OTC:VLTRF) has almost completed a Revised Stage 1 Feasibility Study for the Bunyu Flake Graphite Project in Tanzania, planned for release this month.
The company says it has been able to keep capital and operating costs under control despite cost inflation and rising interest rates, with project economics expected to show an improvement over the original 2018 feasibility study results.
The study’s progress clears the way for financing discussions, which Volt says are underway with multiple partners.
The June quarter also saw the restart of operations at the Zavalievsky Graphite plant in Ukraine despite continued conflict in the country, producing 1,015 tonnes of graphite in its first production run with a second in the works for August.
VRC also enjoyed technical progress, with a North America-based technology partner successfully producing Natural Graphite Anode (NGA) material using Volt’s natural flake graphite.
The test material was then incorporated in a 32650-format lithium-ion battery and tested for cycle life, one of the key metrics for batteries in electric vehicle applications.
Volt says the test was “highly encouraging and showed long cycle life, exceeding typical industry targets” and two more customers are actively evaluating the graphite anode material.
VRC finished the quarter with $2.97 million in cash.
Walkabout Resources Ltd (ASX:WKT) secured important debt funding for the Lindi Jumbo Graphite Mine in Tanzania this quarter, securing formal approval from Gemcorp for a US$20 million debt facility, which provided security to hire and contract resources to prepare for project commissioning.
WKT is targeting commissioning of the Lindi Graphite Mine before the end of the year and remains on schedule.
The company made broad progress across its development goals, finalising several on-site constructions including waste rock retaining walls, various drainage pipes, stormwater drainage and culverts, foundations and equipment plinths.
Walkabout also installed the majority of the mechanical equipment for the processing plant, the associated steelwork and platforms supporting said equipment, and the foundations for ancillary buildings.
From here, WKT intends to finalise the delivery of all equipment to site, advance construction progress on-site, complete the Tailings Storage Facility and finalise operating function contracts, with an emphasis on beginning operational mining and stockpiling activities.