Uncertainty prevails over jumbo flake graphite

By Shruti Salwan
Published: Wednesday, 22 July 2015

Large flakes at elevated risk of shortage with only a handful of new near-term suppliers, while dwindling consumption is putting pressure on prices.

Large flake graphite is one of the primary areas of the graphite industry where a shortage could emerge in the next three years, analysis by IM has shown.

Demand for higher quality flake graphite from a range of industrial and high-tech end use markets – from refractories and foundries to batteries – has the potential to reshape the material’s trade routes. 

End users are pushing for larger flake graphite, in excess of +80 mesh and purities of 94% C and above. This specification is regarded as a high quality product by the industry, but with large refractory consumers taking the majority of supply, this does not leave much room for error if there is even a small uptick in demand in existing markets, leaving aside the emergence of new applications. 

The exploration boom in the last three years uncovered abundant large flake graphite resources across the world. Therefore, on the face of things, any supply issues could be easily resolved. But the struggle to secure funding to build these mines threatens to place a supply solution just out of reach of the industry. 

Marketing speak

Jumbo flake graphite, a marketing term for flake graphite that was introduced relatively recently, refers to +35 mesh size or larger, but within the limits of +50 mesh. Visually, the product is no bigger than coffee granules or road grit, but for some niche users it is critical to their businesses, particularly as there are no available substitutes. 

Supply however is very limited. Presently, only China and Madagascar send jumbo flake to the global market. In volumes, jumbo flake accounted for just under 1% of the world’s 340,000 tonnes global flake graphite output in 2014.

China supplies about 66%, or 220,000 tonnes jumbo flake graphite from Shandong province, which has seen government-forced shutdowns of its graphite processing plants, owing to environmental concerns. The standard jumbo size for Chinese producers is +32 mesh, while Madagascar accounts for the remaining 34% of supply with a +35 mesh product. 

Such a large flake product cannot be produced by all graphite miners, since it is a function of geology. Large flake graphite cannot be manufactured, although fake flake – mainly from China – has made its way onto the market in recent years. It only becomes apparent that this product, which is pressed small flake graphite material, is not genuine once it has been applied. 

The need for new supply has now passed the point of marketing spin, however. A restructure of the world’s flake graphite supply is underway and is overdue, especially for larger flake, higher purity grades. 

In 2014, +80 mesh flake with purities in excess of 97% C, experienced some of the strongest prices in years. Large flake grades with 98% C, for example, recently saw prices reach all-time highs when 94-97% C was at an 18 month low. 

New supply 

Canada and Australia have led the surge in exploration since a flake graphite price spike generated investment interest in 2010. A number exploration projects are now reaching an advanced stage and are offering a potential solution to future shortages. 

Canada-based Energizer Resources Ltd. is one of only a handful of exploration companies (others include StratMin Global Resources, Tirupati Carbons and Chemicals and DNI Metals) developing a mine in an already producing jumbo flake graphite region. Energizer’s Molo graphite project in Madagascar holds the potential to supply 3,000 tpa of +35 mesh material from its overall output of 53,000 tpa, expected by 2016.

ASX-listed Syrah Resources is developing the Balama project in northern Mozambique with a resource of 1.15bn tonnes graphite, grading at 10.2% C. The project has the potential to offer high quality, larger mesh material, ranging from +48, +80 mesh and above, with 3% if its output slated to be in the jumbo flake category.

In Canada, Ontario-based Northern Graphite Corp. is developing the Bissett Creek deposit, aiming to primarily produce large-flake (+80 mesh), high-purity graphite grades. The company is hoping to be in production by 2017, yielding a total of 4,500 tpa in the +32 mesh category; 8,000 tpa in the +48 mesh bracket and a further 7,000 tpa in the -48 +80 mesh range.  

Focus Graphite Inc., meanwhile, has the potential to offer nearly 1,500 tpa jumbo flake material from its Lac Knife project in Quebec, having inferred resources of 3.1m tonnes measured, grading at 13.25% C, and indicated resources of 9.5m tonnes, grading at 14.77% C. 

This list is not exhaustive, however there are several junior players planning to venture into producing jumbo flake graphite, which remains a premium product considering its application in all major consuming markets.

Consumer competition

Out of the total flake graphite consumed in refractories globally, large flakes make up only a small proportion of the volumes consumed, estimated at 7% of total consumption.

The material is largely used in refractories, especially special, non-ferrous refractories, making up a total demand of 15,000 tpa outside China. 

While small percentages are consumed within China, a recent shift in consumption patterns by refractories companies towards large (+80) and fine flakes (-80) and reductions in the usage of refractories per tonne of steel, has seen a drop in jumbo flake consumption rates within the country.

As China pushes forward its plans to implement industrial constraints on the refractories sector to improve utilisation rates of raw materials and enhance the quality and efficiency of their output, the impact on the consumption of jumbo flakes is likely to be negligible.

Following refractories is the expandable graphite market, consuming 35,000 tpa large flake graphite and growing at a gradual pace. 

Although the majority of +40 and +48 mesh is used in foundries and flame retardants, +80 mesh gives a substitute for low quality graphite foils for the consumer electronics and energy storage markets and gaskets for the chemical and automotive industries. 

These end markets cannot use synthetic graphite as a substitute, which gives an edge to jumbo flake.  

Another consuming market for jumbo flake is purified natural spherical flake graphite, used in batteries.

While mesh sizes of +40 and +50 are considered to be ideal, the material is not cost effective against the low cost fine (mainly -80 mesh) flakes. Low cost fine flakes are used as anode material for lithium-ion batteries, which if replaced with jumbo flakes have to be crushed and milled in order to change the flakes into powder. 

Market outlook

In recent years, demand for flake graphite has fallen considerably, with prices sinking to 2009 levels and increasing market competition.

This trend has been compounded by changes in buyers’ approaches towards securing smaller volumes and substituting with more cost-effective materials. 

IM’s industry sources indicate that using jumbo flakes in high-tech applications will require additional processing costs, which is expected to negatively impact demand.