Heilongjiang, China announces plans to clean up graphite industry
Published: Wednesday, 16 April 2014
Consolidation nation: World’s leading flake graphite region to crack down on polluting operations in 2014 and consolidate mines by 2015; global supply and price impact expected to be significant
The worlds leading flake graphite producing region has
revealed plans that could significantly alter the global supply
structure of the industry.
After a number of years of speculation, Heilongjiang province
in China has officially announced plans to crack down on
polluting flake graphite operations and start consolidation of
the mines within the next 18 months.
This has put a question mark over the future of the
worlds largest flake graphite producing region, with the
province accounting for 45% of Chinese production and 29% of
global output in 2013. It will also come as a major boost to
every new graphite exploration project looking to enter the
market in the next three years.
The move follows high profile graphite dust and wastewater
problems in Pingdu City, Shandong province the
countrys third largest producing region which led
to the ongoing blanket closure of all processing operations in
The majority of the worlds medium flake graphite
used in variety of applications from refractories and
lubricants to lithium-ion batteries comes from
Heilongjiang. This includes the industrys most widely
used product, -100 mesh, 94% C (-194).
Six steps to clean up Heilongjiang
Heilongjiangs Provincial Department of
Environmental Protection has announced 6 steps to turn what is
mass scale mining into a more efficient and responsible
operation and eventually create higher value-added
The provincial government plans to consolidate 36 mining rights
into 30 by 2015, and into 25 by 2020.
As well as having areas dedicated to key mining operations and
exploration, the government plans to identify areas in which
mining is explicitly encouraged or discouraged. It hopes to
develop these more concentrated and controlled areas of
operation to shift away from the sprawling mining activity seen
This will also allow the ministry to establish greater control
over the areas mining rights and limit illegal
2. Dust control
Much like in Pingdu, a major focus of Heilongjiangs
clean-up is controlling the amount of dust produced through
graphite mining and processing.
Dust emissions have become a major issue in Chinas flake
graphite industry and while the mineral is inert and not
harmful, air pollution has become a problem for local residents
and farmers, who have coined the term graphite rain
to describe the thick pollution.
Getting a grip on the dust problem through the introduction of
stricter regulation and more modern equipment will be a
cornerstone of the plan.
The government has issued all producers with a dictat to
upgrade their equipment for inspection from 1st September 2014.
Those that fail this inspection will be forced to stop
3. Value-added products
The government wants to establish hi-tech industrial parks to
produce value-added graphite products and move the province
away from its role as a concentrate supplier.
The local towns of Jixi and Hegang (Luobei) have been
identified as initial locations for the parks which will
replicate what has been achieved in Inner Mongolia and
Hubeis graphite industries.
4. Entrance standards
The Ministry of Industry and Information Technology will
tightly enforce graphite industry entrance standards; rules
that will limit new capacity and control expansions.
Newly built graphite plants will not be allowed to have a
capacity of less than 20,000 tpa, with individual production
lines required to process at least 5,000 tpa.
5. Tailing pond safety
Another major environmental issue surrounding the
countrys graphite production is how waste water is
Subsequently, the Department of Safety and Inspection will now
review the safety of the provinces graphite tailing
ponds, approve and distribute certificates, and shut down
illegal ponds or those beyond rectification.
6. Green Mines
The first five points are all designed to establish what China
calls Green Mines. Heilongjiang aims not only
improve the ecological environment from these measures but will
also try to bring all graphite mines in the area up to
provincial and national green mine standards over the next five
What will the impact be?
By Simon Moores in London
It really depends how seriously the Heilongjiang government
takes this plan.
On the face of it, the plan looks extensive, more so than any
in recent history for the graphite industry. But we will only
know the seriousness of the situation by 1st September when the
government begins its inspections.
The industry could be hit with a double whammy whereby the
majority of production in Pingdu, Shandong does not come back
on stream in June/July and then further closures come into
place in Heilongjiang in September.
Our estimations are that this could put at least 50% of flake
graphite supply from both provinces under threat throughout
2014. This equates to 24% or 90,000 tonnes of global flake
graphite output in 2013.
Depending on how demand plays out in 2014 and 2015, the impact
on prices could also be significant.
Supply and demand for flake graphite is finely balanced. The
last time demand rebounded from a slump was in 2010-2011 when
prices rocketed to all-time highs off the back of limited
supply and an unforeseen demand surge.
At that time there were no real supply restrictions in
We could be entering a similar period for the industry now.
Demand has been low for the last 18 months which has seen
prices erode and capacity come off-stream around the world. We
are yet to see any significant demand upturn, but should any
rebound coincide with supply cuts in China then prices could
once again increase significantly.
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IM Data | Graphite - China: Consolidation nation