NextSource, which is listed on the Toronto Stock Exchange,
expects its Molo project in Madagascar to begin production from
the second quarter of 2022 under the first phase of its planned
The first-phase production has been fully funded and will
total 17,000 tonnes per year, with all material already
committed to the company’s offtake partners.
The company has increased its planned production for the
second phase in response to demand from its partners.
"For us to meet expected demand forecasts from our current
offtake partners, we will need to expand to production levels
to 100,000-150,000 tpy as early as 2023," Nykoliation said.
Production for phase two was originally planned for 45,000
"We will need to raise more funding for this, however. We
are now on the radar of several graphite consumers and have
been fielding requests for material that could only be met once
we expand," Nykoliation said.
NextSource has a modular development plan in place, which
will be constructed offshore.
"It derisks the construction phase and provides us speed to
market. Any future expansion is easy with the addition of
modules, flotation tanks or crushers as required," Nykoliation
The company’s profile was boosted earlier this
Davis’ new investment company, Vision Blue
Resources, provided it with a $29.5-million investment.
"[Davis] has aggressive plans to accelerate the growth plans
for our project and to be in line with the shift towards
electrification, bringing up demand from original equipment
manufacturers," Nykoliation said. "[Davis] is going to be
chairman of NextSource and he sees us a strategic part of his
Davis, former chief executive officer of Xstrata, has set up
his new enterprise to bring opportunities in the battery
material space to fruition.
"Our collective goal is to be a dominant global supplier of
graphite throughout the entire value chain and, in particular,
anode material for electric vehicle batteries," Nykoliation
Currently, around 25% of global graphite output of around
750,000 tpy goes into the lithium-ion battery sector, with 65%
heading to refractories and 10% for expandable graphite
applications, according to NextSource. Of these, the strongest
growth is expected to come from the battery sector.
"The advent of the era of electrification means you have
brand new demand for battery applications on top of the demand
for traditional industrial applications for graphite,"
Nykoliation said. "The supply side will simply have to grow in
order to meet the demand from both of these key consumption
Existing offtake agreements
NextSource has two large offtake agreements in place, one is
a major player in the European refractories sector and the
second is a leading Japanese anode-material producer. But the
company cannot be more public about them at this stage.
"We have an ideal deposit that will have half of production
being the large and jumbo-sized flake and half being the medium
and small sized. This is a fortuitous split as it meets the
demand from the offtake agreements we have in place,"
The large- and jumbo-sized material is appropriate for the
refractory sector, along with the expandable graphite
Fastmarkets’ assessment for
graphite flake 94% C, +80 mesh, cif Europe was $1,020
per tonne on February 18, unchanged since December 3 but up by
15.25% from $885 per tonne on November 5 due to tight supply in
China - the major producer of the product - over the
"Our +80 material expands nearly as well as our +50, which
according to a significant manufacturer of graphite foils, is
highly unusual. They described it as 'superflake,’
and we thought, what a great description, so we trademarked the
name," Nykoliation said.
Medium-sized and fine flake graphite, meanwhile, are
feedstock for the anode sector.
Fastmarkets’ assessment for
graphite flake 94% C, -100 mesh, cif Europe, was $600 per
tonne on February 18, unchanged from the previous week but up
by 30.43% from $460 per tonne on November 5. Rising demand and
reduced stocks over winter have been behind the price
Downstream, NextSource is also developing opportunities with
its anode offtake partner in response to demand for the
spheronized purified graphite (SPG) market, which is used in
the lithium-ion battery anode sector.
"We have had very strong interest from buyers for SPG, so we
are accelerating our downstream plans and have a letter of
intent with one of our offtake partners to collaborate on
building a battery anode facility outside of China to supply
spheronized, purified graphite," Nykoliation said. "Our plan is
build this facility in parallel with Phase 1 production, so we
could begin supplying SPG in 2022 as well. Our partners are
also working on introducing coating into our process as
All of the global commercial production of SPG is currently
in China, and NextSource is among a cluster of producers
seeking to enter the space.
Fastmarkets’ assessment for graphite
spherical 99.95% C, 15 microns, fob China, was $2,500-2,750
per tonne on February 18, unchanged since January 28.
emerging spherical graphite producers is Tirupati
Resources, which also has a graphite mine in
Madagascar is developing as a focal point for graphite
global supply increasingly diversifying outside of
A third producer, Établissements Gallois, is also in
the process of ramping up its existing output from the Indian
Ocean island nation, which has a long history in the graphite
"It is a race at the moment among the producers in
Madagascar, as it is among all the graphite companies growing
around the world - not everyone is going to succeed - and we
expect to be in [the] top five to seven graphite projects in
the world," Nykoliation said. "While others have been around
for decades, ours is a brand-new discovery in the southern
region of Madagascar."
While producers are racing to ramp up output, Nykoliation
feels there could also be room for cooperation among the
graphite companies in Madagascar.
"Due to the sheer size of our deposit, we will dwarf the
other producers on the island, but there may be the potential
for collaboration or consolidation in the future. The world is
going to need a lot of flake graphite," he said.
NextSources also has a vanadium project - the Green Giant
vanadium project - in Madagascar, which is separate from
"We also have a very large, stand-alone vanadium resource
located only 11 km from our graphite project. As a result, we
serendipitously have two of the primary raw materials [vanadium
and graphite] that are needed in vanadium redox batteries,"
Nykoliation said. "Like graphite, vanadium already has an
existing and significant industrial use over and above its
requirement in batteries. This gives us great optionality of
whom we can sell to."
Fastmarkets’ assessment for
vanadium pentoxide 98% V2O5 min, in-whs Rotterdam, was at
$7-7.55 per lb on February 19, up by 2.54% from $6.90-7.30 per
lv the previous week. The market has soared by 34.81% since
January 1, when the price was at $5.30-5.50 per lb, in response
to strengthening demand.