Buyers of refractory-grade graphite
face an uncertain future after a combination of production
issues together with increased demand competition have come
into play at the same time.
New Data from Industrial
Minerals Researchs Natural Graphite Report
2012, highlight that only one of the top five
suppliers of flake graphite are increasing production.
Comparing 2010 to 2011 - a period
of solid demand for graphite - only Brazil increased its
output, China and Canada has remained static, and India and
North Korea fell.
Refractories drive natural graphite
demand, accounting for 38% total consumption in 2011, by far
the largest market.
China, the worlds biggest
producer of refractory grade graphite - a product in excess of
80% carbon content and 100 mesh in size or larger - has held
production output. But decreases elsewhere around the world has
strengthened its position, meaning it now holds 77% of world
supply of refractory grade graphite.
Its share of world flake graphite
production also rose, to 67%.
In terms of Chinese mineral supply
dominance, graphite is only behind rare earths (97%),
refractory bauxite (95%) and fused magnesia (85%).
Brazil was the strongest performing
country in 2011, increasing its output to capacity production
of 96,000 tpa. The country is home to the worlds largest
non-Chinese producer, Nacional de Grafite.
Indian production was the most
significant revision after years of being overestimated.
The country has been attributed by
many as producing 140,000 tpa, a figure wildly
Actual production, as calculated by
Industrial Minerals Research, is 35,000 tpa of flake
graphite only, the majority of which is consumed in
refractories to fuel Indias strong steel sector.
North Koreas sole graphite
miner faced the familiar problems dogging its mining industry
with water, electricity availability and logistical problems
hampering output. The 30,000 tpa produced is 100% captive
supply for China.
Graphites production from the
worlds fifth largest producer, Canada, was also static.
The vast majority of the countrys production comes from
one mine in Quebec operated by Timcal Ltd. A smaller operation
in British Columbia is also active.
Refractories & EV batteries compete for raw
Graphite buyers in the refractories
industry have faced little competition for raw material for
many years. A consistent, low cost supply of graphite from
China has flowed into the west since new production came onto
the world market in a major way in 1989.
This put many new, higher cost,
operations out of business within four years, a situation which
is on the surface very similar to today with a glut of new
explorers entering the industry on the back of higher prices in
2010 and 2011.
Electric vehicle batteries, in
which graphite is used as the anode material, have the
potential to add a new layer of demand to graphite, taking it
well above todays 1.019m. tpa production levels.
This also adds a new risk factor for traditional buyers of
graphite as batteries and refractories will go head to head for
the same raw material. Producers of graphite will also face the
decision to upgrade flake to higher value spherical graphite
for batteries or sell the feedstock direct to refractory
manufacturers, adding a new level of complexity to the industry
as well as new demand.