It may seem like it has been an exciting year in
the graphite industry to the average Joe on the street, but
institutional investors will know differently.
There has been some recovery in steel markets,
and Tesla’s Gigafactory announcement has led to a
spate of speculation within the junior industry that there will
be a supply shortage by 2020, but the reality is that prices
have trickled lower across the board and, these days, some
developing projects are attracting more attention because of
their by-products over their natural graphite.
What a project needs in order to stand out varies
according to who you speak to. Some parameters have been set
out (pp38-45) to compare a clutch of development-stage
projects based on factors including flake size, carbon content
and offtake agreements - all using information released by
According to Stephen Riddle, CEO, Asbury
Graphite, a project needs "a realistic production cost,
realistic selling price and a realistic output of between
15,000-20,000 tpa that you can sell into the worldwide
"Look at Nacional de Grafite," he
explained to IM. "Did they start with 90,000
tpa capacity? No, they started with 10,000 and it took them
40-50 years to get to that capacity (…) they are not
selling their full capacity today but they are selling around
"The biggest problem is the investment
community," Riddle said.
"They don’t understand graphite,
because if they did they would realise that most of them
wouldn’t mess with it. This is because the market
doesn’t need big graphite mines. Not today. Maybe
in 5 or 10 years’ time if lithium batteries take
off and we need huge mines. And their problem is they
don’t want to look at the smaller graphite mines
because they are too small; and they don’t want to
waste their time on a company that will only have revenues of
$10m. They shouldn’t even be messing in this
market if they don’t want to think small," he
"These big mines? Not one of them is going to
make it today," he said.
Others believe that a good project has to have
both high and consistent grades. This is key for those trying
to interest end users looking for raw materials to be used in
lithium-ion (Li-ion) batteries, argues Manoli Yannaghas,
UK-based StratMin Global
Resources’ managing director.
"People tell me they want reliability. They want
something they can depend on," he told IM.
"They definitely want consistency and form. They want quality,"
The battery question
After announcing in March this year that it
planned to build its Li-ion Gigafactory in the US,
Tesla faced questions over where it would source its raw
materials from and whether its supply chain would match the
'green’ credentials it promises for its cars.
In August, the company confirmed to
IM that it will not be exclusively looking to
source raw materials for its Gigafactory from North
"As part of our plans for the Gigafactory, Tesla plans
to transition our sourcing of cobalt, graphite and as many
other materials as possible to North America," a company
spokesperson told IM at the time.
"Our strategy is biased toward developing the
closest supply chain possible. This is not specifically limited
to North America if there are other suppliers nearby that can
demonstrate a lower overall landed cost and comparable
environmental impact," the spokesperson added.
Tesla stressed that while its key objective is to
minimise the environmental impact of making its EVs, it also
needs to balance this with efforts to bring down the price of
its batteries and, therefore, its cars.
Since then, anyone with a newsfeed on graphite
has been inundated with press releases explaining just how well
positioned each project is to take on the responsibility of
providing the graphite component of Tesla’s Li-ion
"Everyone is speculating as to who Tesla is going
to take on. I think they are talking to everyone to see what
they can do but no one can really show what they can do," Don
Baxter, president of Canadian junior Focus Graphite, told
Focus Graphite has the benefit of green
credentials, he reminded IM, as its Quebecois
Lac Knife (see Table 1) project is run using
hydroelectricity. This also brings the project’s
operating cost down.
"There are three points that make us attractive
to Tesla. We have our feasibility study, we are environmentally
sounder than competitors and are battery ready," he said.
"The unique thing about Lac Knife is that
everything above 200+ is 98%C. We can covert a low value cell
product and transfer it to a high value product.
We’ve debunked the myth that this cannot be done,"
Greg Bowes, CEO of fellow Canadian Northern Graphite, made
the point that at this stage "no one knows what agreement they
are going to get".
"Tesla is looking at doing something and they
need to know where the graphite is coming from," he told
"We have the best location of anybody in North
America and are the closest to civilisation, we are the most
advanced," Bowes said of his Ontario-based Bisset Creek
"We have a bankable feasibility study and a major
environmental permit so we can be in production within their
timeline. We have the highest percent of battery grade
production — 90% of our production could be turned
into anode material for Li-ion batteries and for other
companies that number is between 40-60%," he added.
As well as this, Northern holds a tested,
proprietary technology to increase the purity of Bisset Creek
(see Table 1) concentrate to 99.99%, commonly accepted
as 'battery grade’.
"Right now that process is being done in China
under very unsavoury conditions - you don’t want a
green car with a dirty battery," he added.
"I think that whether it is Tesla or somebody
else, the potential for a strategic partnership in the li-ion
battery space is pretty good," Bowes told
Table 1: Selected development-stage
Big North Graphite
Brownfield. NI 43-101
compliant technical report. There are three flake
graphite deposits on the El Tejon property: Cerro
Centro de la Cucharita, Temascal Tejon and Curva del
El Tejon is the only mine to
have produced flake graphite in Mexico, with a peak
capacity of around 4,400 tpa graphite. The mine was
operated by the government between 1980 and 1988, and
was then run privately until 2002 when it closed due to
low graphite prices.
Processing of graphite ore
produced extra-large, large, medium and fine flake
graphite grades of 91-93% C.
Assay results confirm an
average grade of mineralisation of 6.85% C with
mineralisation up to 11.7% C.
Valence Industries Ltd
Four MoU for flake graphite
sales "in excess of 80,000 tonnes for two or more
Bora Bora Resources
Has renewed its exploration
licence. Land clearing has been completed so that the
company can begin drilling and ground geophysics.
Produced high-grade graphite
for several decades until the operation was stopped in
Extensive veins of high-grade
graphite are visible from surface but the area has not
been subjected to any modern exploration
Energizer Resources Inc.
Second largest confirmed
flake graphite resource in the world and the biggest
under Canadian NI 43-101 regulations, hosting an
indicated mineral resource of 84.04m tonnes grading
6.36% C and an inferred resource grading 6.29% C of
crystalline flake graphite.
Sits as part of the
company’s Green Giant project, which also
includes a sizable vanadium deposit.
Pilot plant results show an
average grade of the extra-large flake (+48 mesh) was
97.7% C, while the large flake samples (+80 mesh)
graded 97.4% C. Medium flake graphite samples, greater
than 200 mesh, were 96.7% C. The average total carbon
content of 12 pilot plant surveys was 93.7% C at an
average carbon recovery of 90.3%.
Sits within Mahenge graphite
JORC upgraded resource
estimate: indicated 12.8m tonnes at 10%C, for 1.28m
tonnes of contained graphite.
Recent testwork showed that
its graphite has a melting point of 1,305°C.
Recently signed a letter of
intent with German integrated materials and
technology company ThyssenKrupp Metallurgical Products
GmbH, a subsidiary of ThyssenKrupp AG.
Maiden JORC resource.
intersections with the weighted average graphite
carbon, include: 50 metres at 12.2%C; 150 metres (from
surface) at 10.3%C; 97 metres at 11.8%C; 152.5 metres
200,000 tpa mine is
unprecedented in the flake graphite industry in terms
of size, with the closest suitable producer outside of
China being Nacional de Grafite in Brazil.
uncoated battery grade spherical graphite.
Offtake agreement with China
Aluminum International Engineering Corp. (Chalieco),
part of the Chinalco Group, for 80,000-100,000 tonnes
Brownfield (mica and
graphite). Has undergone multiple diamond drill
surveys, airborne survey and obtained a bulk sampling
permit for 480 tonnes graphite.
Test carried out:
Flotation (+48 mesh flotation concentrate
assayed 99.1% Cg (100% C);
Roast (Increased purity from: 93.5% Cg (94.4%
C) to 99.1% Cg (100% C);
(Increased purity from: 99.1% Cg (100% C) to 100% Cg
Ignition (LOI tests resulted in 100% loss -
zero ash residue);
Glow Discharge Mass
Spectrometer (GDMS) (Evans Analytical Group,
NY - Nuclear Purity, by EBC);
Treatment in an inert atmosphere (resulted in
a 99.9978% purity)
Mason Graphite Inc.
Pilot plant testing
PEA released April 2013
places concentrate production at 50,000 tpa, at a
production cost of $390/tonne.
Great Lakes Graphite
Flotation concentration tests confirm that a high
purity concentrate can be easily produced from its
NI 43-101-compliant resource
estimate is in the advanced stages.
NI 43-101 feasibility study
technical report filed.
Measured and Indicated
resources totalling 9.5m tonnes grading 14.77% C, with
inferred resources* of 3.1m tonnes grading 13.25%C.
Holds a strategic 40,000 tpa
offtake agreement for future production.
Holds a bankable feasibility
study and a major environmental permit.
90% of production could be
turned into anode material for Li-ion batteries.
Holds a proprietary, tested,
technology to increase the purity of concentrate to
99.99% - which is necessary for it to be used in
Despite these assurances, it is plain that
graphite prices (see p59) have not fared well in the
Flake graphite prices have been relatively
stagnant, after experiencing some sharp falls in 2013. However,
most expect the market to see some recovery in 2015.
"Everyone I speak to says demand is going to go
up. The question is around supply. In the short term, prices
will rise or strengthen; if other projects come online then
they won’t," Yannaghas told
"There are going to be two catalysts for the
industry. One is an economic recovery. So, if we get an
economic recovery and traditional steel demand comes back,
prices will respond and that will hopefully create the
conditions that enable us to get financing to build a mine,"
"The second catalyst is that, despite the fact
that economies are weak, Li-ion batteries are still growing at
over 20% a year and that’s even with very slow
adoption of electric vehicles. We are going to reach a tipping
point where Li-ion batteries start to drive the graphite price
and I think they are getting closer and closer to that. When
that happens we will get a recovery in price," he said.
"These two things will drive the industry and
enable projects to get built because we can all talk about
there being 60 graphite companies out there and all come from
different projects, but not one new project has been built," he
This year, two mines have come online and both
have been from past-producing deposits (StratMin’s
Loharano mine in Madagascar and Flinders Resources, Woxna mine
"The big advantages [of bringing a past producing
mine online] is time," Flinders CEO, Blair Way, told
IM during its opening ceremony in
"We had all this infrastructure in place. We had
our roads, we had our power lines, we had all the civil work
(…) we were quite literally refurbishing and replacing.
Some significant parts of the plant, but that - what took us
six months - would have taken us 18 months if we were building
from new, probably closer to 24 months from start to
See Blair Way’s interview on
bringing Woxna online at www.indmin.com/video
Table 2: Vietnam graphite production and
forecast to 2025 (tonnes)
Source: Dao Dac Tao, vice chairman and general
secretary, Vietnam Mining Science and Technology
Table 3: Vietnam graphite ore
Name of the mines and ore points
Reserves (10, 000 tonnes)
The Northwest Region:
Nam Thi (Lao Cai)
Bao Ha (Yen Bai)
Mau A (Yen Bai)
Yen Thai (Yen Bai)
Hung Nhuong (Quang Ngai)
Total Reliable reserves
Source: Dao Dac Tao, vice chairman and general
secretary, Vietnam Mining Science and Technology
Many companies this year have made much of
agreements signed with strategic partners - although the
majority of these have been memorandum of understandings
(MoUs), rather than firm agreements.
"I don’t think that offtake
agreements are worth anything unless you can prove yourself
first," Yannaghas told IM. "An MoU is a very
different thing. I don’t think they will get it
unless they get into production," he added.
StratMin’s shares skyrocketed
by more than 80% on London’s AIM after it
announced that it had signed a five-year offtake agreement for
"all the material it can produce within a predetermined product
specification" from Loharano.
The name of the buyer was not revealed, but was
described by StratMin today as "one of the world’s
largest independent processors and merchants of graphite".
While this was not the company’s
first sale, Yannaghas said it was the first meaningful
commercial agreement for StratMin’s Loharano
graphite. In September 2013, StratMin agreed to sell an initial
200 tonnes graphite to Austria’s Grafitbergbau
Kaiserberg, but said at the time
that it was keeping its options open regarding
"A real offtake agreement is take or pay. You
have a price and it is good for ten years. Nobody has that
yet," Bowes said.
"You can have all the MoUs you want. I want to
see a sales agreement. Selling graphite is extremely difficult.
You’re not selling a commodity like nickel where
you’re basically saying [if there is] 80% here I
get this [much money], you have got to go to each individual
end user and find out exactly what they want and get your
material proved and that can take years sometimes," Riddle
Vietnam — exploitation expected
One country which has invested in its graphite
production is Vietnam, which is looking to boost its output in
the near term.
Graphite mining was implemented in Vietnam in
1915 from the Hung Nhuong deposit, Quang Ngai province
(South Central Vietnam), closely followed by Lao Cai in 1927.
The Mau A deposit, in Yen Bai province, was the
next deposit to be exploited in the1970s.
However, despite a history of graphite production
and plentiful resources, US Geological Survey (USGS) figures
suggest total output from the country has never exceeded
100,000 tonnes; in fact, current annual output ran from
5,000-15,000 tonnes, only enough to supply to domestic
From 2015, Vietnam’s graphite
production will increase considerably however, as new
investment has been earmarked specifically for the exploitation
of Yen Thai graphite deposit in Yen Bai province (Northwest Bac
This is an open pit mine, with a design capacity
of 250,000 tpa of crude ores.
After processing it is estimated that about
40,000 tonnes of concentrate can be generated, with content
between 85-97% C and grain size from 200-60 mesh or 75-250
micron. The majority of this product will be exported.
By 2020, Vietnam’s graphite output
is expected to reach 50,000 tpa, but this could even be higher
as several foreign investors have received a permission to
exploit graphite in Quang Ngai province.
Vietnam is a rich graphite resource, with
distribution in Lao Cai and Yen Bai provinces in Northwest Bac
Bo and Quang Ngai province in South Central Vietnam.
The total resource of graphite ore is
estimated at 32.36m tonnes, in which 4.6m tonnes is proven
(10-15% C) and 23.2m tonnes is probable and possible (4-10% C)
The Nam Thi deposit in Lao Cai deposit, which is
the largest in Vietnam, holds 15.9m tonnes of ore alone, in
which the industrial ore is 9.8m tonnes, with an average
content of 12.5% C.
Graphite production in Vietnam chiefly has been
dogged, however, by being fragmented in terms of the companies
exploiting the resources and, consequently, by backward
technology, low productivity, inconsistent quality mix and a
dependence on a small domestic market.
These factors mean that it is still not possible
to define who Vietnam’s largest graphite producer
However, Ngoc Vien Dong Commercial Ltd Co., a
company which is developing the Yen Thai graphite deposit in
Yen Bai province, has been slowly investing in technology and
equipment in the resource, with a view to becoming the largest
producer in Vietnam.
The graphite being developed is mainly expected
to fulfil demand in castings and refractory markets, as well as
Countries such the US, Australia, Germany and
France are seen as potential end users for the graphite used in
Lubricants make up to 9% of total demand for
graphite, although it is an industry which is not often
discussed. It is a between 37-39m tpa market. Graphite is used
in dry or solid lubricants. Graphite content of some lubricants
can be up to 10% of oil-based products, but usually varies
between 3-5% of content.