Sri Lankas third largest vein
graphite producer is considering its future after only a
two-month trial period. Slow graphite demand is hampering
operations at the Ragedara Mine in the centre of the
The Ragedara mine is now on hold after
only resuming operations in July 2012 following a 25-year
absence. It sold just 10 tonnes of high quality, vein graphite,
95% C in hand mined lumps (+1 mesh) since reopening.
The mines resurrection was backed by the
joint support of Sakura Private Ltd and the government, but is
now facing a lack of funding to continue with the underground
mining of vein graphite a unique, naturally occurring
high quality form of graphite only commercially mined in Sri
A market source told IM
Data that the initial output from the Ragedara mine
was just a trial order placed by a German company for testing
purposes. The Ragedara mine owners are operating through a
preliminary license, valid only for nine months, which limits
them to produce merely 20 tonnes a year, until they receive a
valid industrial license.
Ragedara has a production capacity of
800-1,000 tpa but is lacking the investment required for the
purchase of essential machinery and equipment used for drilling
and extraction purposes at the underground operation.
Another industry source explained Sri
Lankas vein graphite suppliers are not experiencing new
business at present due to the economic slowdown in the US, UK
and Japanese markets. The other major producers, including
Bogala Graphite Lanka Ltd, 90% owned by German-based Grafit
Kropfmühl, and Kahatagaha Graphite Lanka Ltd (KGLL),
another fully government-owned entity, are fulfilling the
orders from earlier in 2012.
Vein graphite is a major export product
and source of income for the Sri Lankan economy. Other minerals
mined in the country include: quartz, feldspar and silica
Timing of return key to lack of
The move to suspend operations is somewhat
surprising after only two months of operations. Ragedara has
returned to production on a downward trend of graphite demand
as the industry feels the impact from sluggish Chinese demand
and fearful European economies.
Owing to the steel industry, refractory
production has slowed in H2 2012 and graphite is suffering as a
result. According to our database vein
graphite prices for 99% C, -200 mesh, ranges between $2,750-
$2,850/tonne, with the prices due for renewal post-November
High quality flake product (94-97% C, +80
mesh) has fallen from the highs of $2,500-$3,000/tonne in 2011
and early 2012, to $1,800-$2,200/tonne in H2 2012.
Vein graphite is priced separately to
flake with contracts agreed on an annual basis. However it is
not sheltered from the overall trends in the industry.
Should Ragedara wrap up business then it
would strengthen the position of Bogala Graphite which produces
1,600tpa and KGLL which has an output of 1,200tpa. These
companies sell graphite to European traders and processors to
be resold to the refractories industry.