With graphite prices reportedly
stabilising after falling throughout most of 2012, relative
calm has descended over an industry which exhibited a striking
degree of flux, both in terms of pricing and investor
sentiment, during the past two years.
This serene period has given the
graphite market an opportunity to pause and take stock of
developments in the sector to date. Looking back over 2012,
graphite news has been dominated by Chinese policy, on the one
hand, and the relentless charge of junior explorers on the
The well-oiled PR machines of
mining companies exploring in Canada, Australia and Africa have
ensured that there has been no shortage of information on the
graphite potential of these regions.
Scandinavia and Brazil have also
claimed a significant amount of attention, as juniors vie with
one another for investment in what has recently been a rather
shallow financing pool.
Graphite projects in other parts of
the world have received less consideration, without quite going
This month, IM
turns the spotlight on some of these under the
radar graphite developments.
|Breach of the peace: Huelvas tranquil
Mediterranean landscape could see the return of graphite
mining within a few ears.
A Meteoric rise for Spain?
In October 2012, Australian
multi-mineral explorer Meteoric Resources NL lodged a
65km² investigation permit application to explore for
coarse-flake graphite in the Aracena Metamorphic Belt, in
Huelva province, southwest Spain.
More commonly associated with
Baroque architecture, artisan ham and Spains oldest
football club (named Recreativo de Huelva and founded in 1889
by British miners working for Rio Tintos copper and
pyrite operations in the area), Huelva province is home to two
of four known volcanogenic massive sulphide (VMS)
graphite-containing deposits in the country, according to the
US Geological Survey (USGS), the other two being in Pontevedra
on Spains northwest coast.
The region, situated 80km northwest
of Seville, has a history (albeit a modest, rather primitive
one) of graphite mining, but the deposits have remained dormant
for the best part of a century.
The area was last mined in
1918, Roger Thomson, Meteoric CEO, told
IM. The old workings appear to be
generally less than 100m in length, and worked to depths of
less than 25m. Significantly, no drilling or modern exploration
has been carried out on this old mining area.
Some records of historic mining
activity exist, and geological research produced by
universities in Madrid and Huelva has identified several
graphite occurrences and three former graphite mines over an
10km strike length.
Analysis of this information
indicates that the graphite bodies worked during the early part
of the 20th century were between 1 to 8 metres thick, although
deposits up to 24 metres thick have been reported.
Average grades mined from the
deposits ranged from 13%-18% C, with more recent academic
studies recording samples grading as high as 45% C.
Collated geological data has indicated four types of graphite
occurrences in the area: strata-bound graphite (which make up
the majority of the occurrences) related to gneisses and
quartzites; disseminated graphite flakes within gneisses;
graphite associated with quartz-feldspar rocks; and graphite
|Archive images of the past-producing San Carlos
graphite mine, Aracena: a) mine buildings; b)
remains of processing mill; c) old mineral washing
plant; d) gallery entrance.
Image: JC Fernandez Caliani 2010
The graphite in each of these
occurrences is reported to be highly crystalline, with graphite
crystals in the strata-bound mineralisation ranging from 0.25mm
to 1mm in size.
Meteorics 100%-owned permit
application covers all of the available known graphite
occurrences in the Aracena Metamorphic Belt, together with
prospective areas of potential mineralisation yet to be
The multiple occurrences of
coarse-crystalline graphite are mostly within a well defined
10km-long corridor, Thomson said. This pattern indicates
that the Cortegana graphite field has the potential to host
high-quality graphite deposits amenable to open pit mining, he
The eastern part of Meteorics
permit application covers the margin of the Sierra de Aracena
nature park, an undulating landscape of olive groves, livestock
farming and natural woodland.
Thomson stressed that mining
permits are allowed within this park, however, subject to
An Investigation Permit
requires a written application followed by a geological and
environmental report with a proposed work programme, which are
currently in preparation, he told
Meteoric has been advised by
the authorities that it now has priority of
application. We understand it may take a while - possibly
a few months - to process the application and grant the
permit, Thomson added.
Meteoric is carrying out a search
of historical records to identify areas with size and grade
potential for sampling and mapping, if, and when, the permit is
application is successful, the company plans to use airborne
electromagnetic surveys to identify graphite bodies and assess
the potential of the 20km-long prospective corridor within the
permit, in the hope of finding large, thick, near-surface
Meteorics investigation of
the area is still at an early stage, and no information is
presently available regarding potential resource size,
production estimates or a timescale for developing the site,
He added that the area is serviced
with power, roads and a nearby railway, which will help to
speed up mining development, if the project goes ahead.
India: Chinas understudy?
Accounting for 35,000 tonnes
(3.43%) of global graphite supply in 2011 against Chinas
780,000 tonnes (77%) share, according to IM
Reasearchs Natural Graphite Report
2012, it seems impractical to suggest that India can
expect to soon rival Chinas supply monopoly.
But the potential for India to
increase its standing in the world graphite market is huge.
India, currently the globes third-largest graphite
supplier, is home to eight significant graphite mining
companies in three major graphite producing regions.
With mining operations in the
eastern states of Jharkhand, Odisha and Tamil Nadu, in addition
to massive and, as yet, untapped reserves in Arunchal Pradesh,
Jammu and Kashmir, India has been a consistent supplier of
graphite since the 1960s.
Headquartered in the city of
Ranchi, Jharkhand province, northwest India, Tirupati Graphite,
the mining arm of Tirupati Carbons & Chemicals Pvt Ltd, is
one of the later additions to Indias eight major graphite
Established in 2006, the company
began as a provider of warehousing and processing facilities
for natural graphite concentrate sourced from Indian mines
belonging to other companies.
Tirupati started mining its own
graphite in November 2010, and its operational arrangements
with other mine owners ceased in June 2012, leaving the company
entirely self-sufficient from its own resources.
Located in the Palamau district
around 140km northwest of Ranchi, Tirupati owns two producing
graphite mines - the Rabda and Gaura deposits - in addition to
the Ekta advanced exploration project.
We are expecting to get 50%
[80,000 tpa] of our production from Ekta, 30% [50,000 tpa] from
Rabda, and 20% [35,000 tpa] from Gaura for our targeted total
output of 165,000 tpa by 2013, Shishir Poddar,
Tirupatis managing director, told
The company aims to reach a total
output of 400,000 tpa by 2016 by ramping up production at all
three mines, Poddar said.
Rabda presently produces around
30,000 tpa graphite ore, and development of the mine is in
progress with a target of bringing output up to around 50,000
tpa within the next few years.
Full-scale mining at Gaura
commenced in September 2012, with planned output of 20,000 tpa
up to Q2 2013, increasing to 35,000 tpa from Q3 2013.
Beneficiation studies and
development of process flow sheets completed to date have
established that graphite from the Ekta deposit can be
beneficiated to a purity of greater than 96% C, at a lower cost
than graphite from either of Tirupatis other
Tirupati is now in the process of
obtaining statutory clearances from the Indian government to
begin mining operations at Ekta, with a view to begin
developing the mine in the first quarter of 2013, and
commencing full-scale production by Q3 2013.
The company has also identified
three new graphite deposits in Palamu, and applications for
mineral concessions for these areas are now under consideration
by the state government.
Further afield, Tirupati is
conducting geological surveys to outline additional resources
in some districts of Andhra Pradesh, in south-east India.
Tirupati is also working to develop
technology for manufacturing an extensive product mix,
including spherical graphite, expandable graphite and
high-purity flake graphite, to target the full spectrum of
flake graphite applications, Poddar said.
We are presently selling most
of our output in the Indian market. With the planned increase
in our capacity, we shall be looking additionally at markets
mainly in Europe, the US and Japan.
Poddar is confident that India has
the potential to surpass Chinas graphite dominance, if
not in overall scale, then through the quality of its deposits
and the efficiency of its operations.
India will surely be a global
source for flake graphite in view of the size and quality of
its resources, he told IM. The
ability of China to supply the worlds flake graphite
requirements at unmatchable prices, as it did until a few years
ago, no longer exists.
India is also at an advantage
compared with many other parts of the world, having had more
than four uninterrupted decades of experience in mining and
processing graphite, Poddar added.
In Poddars view, price
movement in the natural graphite market will largely depend on
consumption growth from new applications.
The consumption of flake
graphite in conventional applications is saturated, and only
moderate future growth is expected from these uses. Increased
consumption can be expected from newer applications, mainly
energy storage, composite materials for different applications
and the commercialisation of graphene.
In my estimation, the global
growth in consumption will be in the range of 7-10% per annum
from 2013 to 2018, Poddar added.
This being the case, and
assuming new resources take the minimum projected time to
develop, there will be upward pressure on the prices for at
least the next three years. Thereafter, it will depend on how
future consumption shapes up and how new resources
Turkey has been an irregular
producer of low-grade amorphous graphite since the latter part
of the 20th century. The countrys most productive period
was in the late 1980s, and output peaked in 1991 at around
Graphite production plummeted after
1991, however, owing to a combination of political and market
factors. But with the output of amorphous graphite from China
set to decline sharply in the near future, Turkeys role
in supplying the market may become more important.
In a note on graphite prices
published in November, House Mountain Partners founder, Chris
Berry, commented: The consolidation of amorphous graphite
mines in [China] in the name of minimising environmental
impact, will no doubt curtail amorphous supply, with the
Chinese goal of keeping an eye on the industry and ensuring
domestic resources serve domestic needs first and international
needs second. This should be supportive of pricing going
No Turkish company is presently
producing graphite, Sait Uysal, a Turkish mining consultant who
has worked on a number of graphite projects in Turkey and
around the world, told IM.
There are, however, at least three
companies involved in developing graphite mining projects.
These are: Karabacak Mining (also known as Oysu Graphite),
Bilginer Mining and a German-owned company, Zelda
Unlike some other European
countries, such as Sweden, Turkey has not been a beacon of
interest for foreign exploration companies.
Because most foreign
companies focused on flake, amorphous is not so attractive for
foreign investors, Uysal said.
Local companies set to
Karabacak ceased production in
2008. Prior to this, the company owned and worked a graphite
mine in Kutahya city, Altõntas province, and had a
flotation plant with an input capacity of 100 tonnes/day.
The company is now looking for a
partner with whom it can restart production from the Kutahya
mine, Uysal said.
If the restart is successful, the
project could potentially produce up to 500 tonnes/month of
amorphous 80-85% C grade graphite concentrate.
Bilginer Mining operated
graphite-producing mines in Turkey during the 1980s. It was
sold to a new owner in 2012, and is planning to restart
operations in the near future, Uysal told
Earlier this year, Zelda Resources
signed an agreement with a Turkish company to develop the
graphite mine in the Anamur/Mersin region. But inaction on
Zeldas part makes it unlikely that the project will take
off, according to Uysal.
It is almost six months
[since] their agreement (...) and if they do not start
exploration work within the first six months of their
agreement, then the contract will automatically
Despite apparent teething problems
for companies attempting to enter, or re-enter, graphite
production in Turkey, the attractions of mining in the southern
European nation remain strong.
The cost of producing graphite in
Turkey is considerably cheaper than elsewhere in the world,
This is helped by the fact that the
Turkish government gives substantial incentives for mining
companies, including tax exemptions for up to seven years, and
firms are entitled to receive a reimbursement for up to 50% of
their electrical costs.
Low costs are one of the most
important factors underpinning the success of a graphite
project, Uysal said, adding that be believes that the higher
prices the market has seen during the past two years are not
The most important advantages
of the amorphous graphite in Turkey is grade, Uysal told
The majority of the deposits
have a run-of-mine ore grade of over 25% C, and some of them
have ore grades of between 50 to 60% C, he added.
This means you have to
process smaller amounts of ore to produce the saleable
amorphous grade of 85% C. Working with lower grade ores - such
as 5% C material [as some Chinese producers do] - can be five
times as costly as working with 25% C ore, he said.
Table 2 shows average ore grades in
some of the main graphite reserves in Turkey. It shows the
fixed carbon content of each deposit, and an estimation of the
size of each reserve, based on surface information and data
compiled by Turkeys General Directorate of Minerals
Research and Exploration (MTA).
Turkeys geographical position
also makes it an inviting prospect for would-be miners seeking
to supply the major consuming markets of Europe and Asia.
Amorphous Turkish material could be
supplied to major industrial markets of lubricants, paints,
refractories and casting.
For Turkey, Europe is the
main target, Uysal said. The continent is importing
more than 150,000 tpa of graphite, of which 50,000 - 100,000
tpa is amorphous, Uysal said, adding that Turkey has very
important competitive advantages for Europe.
It would take less than a week for
Turkish material to be delivered to the furthest part of
Europe, and logistics costs are relatively cheap, he said.
Trading is also helped by the fact
that Turkey is part of the EU Customs Union.
Despite graphites designation
by the EU as a critical mineral, Uysal believes it
is unlikely that Turkey would ever join the EU as a member.
I think that critical
minerals are irrelevant in this issue. But our co-operation and
transaction with European companies will increase in this
area, he said.
Despite his optimistic assessment
of Turkeys potential to supply graphite, Uysal was
conservative in his pricing outlook.
Most probably we will
[eventually] see the same prices as those before the price
boom. And this will be a big problem - even now it has started
to make problems for juniors - because of the gigantic amount
of projects under development, he said.
The price boom that we have
seen in past two years was not because of the demand; it was
because of the supply, he added.
Uysal pointed to United Nations
statistics, which show that world total graphite exports in
2007 were around 750,000 tpa. China accounted for 88% of this,
with exports of 670,000 tpa of natural graphite. In 2009, world
total graphite exports dropped to roughly 500,000 tpa and China
accounted for almost 90% of it with 458,000 tpa.
This means export volumes
decreased by 30% in two years, and this created price hikes as
demand for natural graphite remained the same, he
But today, we see an
interesting situation developing: export quantities are still
low, but prices are also decreasing. This means that demand has
weakened. So, any recovery in production, or any increase in
production, will have substantial effects on prices in the
market, especially for flake graphite.
Prices before the boom could be the
benchmarking for market balance, Uysal said.
Estimations higher than those
price levels are really a very big risk. My estimation of
amorphous graphite normal market prices for 85% C contented
concentrate is $400-$600/tonne. There could be some
fluctuations below or over this price level, but I do not think
that it will be sustainable.
Mexico: Big North looks
Mexico is a medium-sized producer
of amorphous graphite accounting for 0.11% of total world
output, equating to around 12,000 tpa of amorphous material in
The country hosts one of the
worlds first commercial amorphous mines in the Sonora
region, which began producing graphite in 1881.
Historically, Mexico has been a
supplier of amorphous graphite to neighbouring US markets, but
the countrys output has waned in recent years as Asian
producers have usurped Mexico as a low-cost supplier.
But with amorphous supply from
China in decline, Vancouver-headquartered Big North Graphite
Corp. (BNG) is the latest foreign company to see an opportunity
in reviving Mexicos graphite fortunes.
By looking to restart amorphous
production in some of Mexicos dormant mines, BNG will be
joining the likes of US-based Asbury Carbons and Superior
Graphite, which already have a significant presence in the
countrys graphite mining sector.
The mines BNG are looking to
develop are located in Mexicos Sonora state, about 40km
away from the city of Hermosillo in northwest Mexico. ÊAt
the time of writing, the company was in the process of
acquiring the Aki Wiki concession, containing two past
producing graphite mines, and a joint venture in the Nuevo San
Pedro (NSP) mine.
According to Spiro Kletas, BNG CEO,
the company expects to have completed the acquisition by early
The NSP mine is in the
process of being re-started. BNG intends to help accelerate
this re-start; timelines are to be determined, as is the size
of the operation, Kletas told IM.
The company has not [as yet]
finalised any sales agreements as such, we are leaving it
Kletas said that it was difficult
to estimate what the costs of production for NSP would be until
the mine is in operation.
The mine was operated
privately previously, and as such BNG does not have exact
figures. That being said, our aim is to improve efficiency at
the mine by implementing modern mining techniques and
equipment, which will definitely have the effect of lowering
Despite amorphous graphites
reputation for being the poor cousin of the higher value flake
material, BNG believes that there is a significant and growing
market for amorphous graphite.
There is a market for final
product amorphous graphite both in Mexico and the US;
approximately 60% of the graphite market is amorphous graphite,
and the vast majority of worldwide amorphous production in from
China, Kletas noted.
BNG hopes to provide some
diversity of supply, and the projects are near one of the
largest consumers of amorphous graphite - the USA - that
currently doesnt produce any graphite of its
Although Kletas could not give a
definite start date for operations at NSP, he told
IM that he hoped to be in production by the
end of 2012.
In terms of BNGs wider focus,
Kletas said that the companys intention is to capture
some of the graphite market as soon as possible through the
Sonora amorphous projects, and continue to explore its Canadian
projects, which are large flake targets.
Kletas added that, in BNGs
view, amorphous graphite presents a great opportunity in the
near- to medium-term.
The amorphous graphite market
is large and growing, and most new mines coming online are
flake graphite projects.
To the best of my knowledge I do not know of any new
amorphous projects coming online. We are excited by the fact
that the NSP mine gives BNG the opportunity to enter the market
in the near term and provide supply.