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High graphite prices spur new ex-China developments

High graphite prices, rising demand and ongoing environmental inspections and closures in China and now India are spurring on new developments elsewhere in the world.
High graphite prices spur new ex-China developments High graphite prices spur new ex-China developments High graphite prices spur new ex-China developments High graphite prices spur new ex-China developments High graphite prices spur new ex-China developments

Graphite from Syrah Resources' Balama operation in Mozambique

Roskill said in a preview of its Natural and Synthetic Graphite: Global Industry, Markets and Outlook to 2028 report that although graphite prices had fallen in recent months, May prices for 4-97%C fine, medium and large size flake graphite were still 17%, 24% and 31%, respectively, above previous lows in September 2017.

"Higher prices through 2018 have encouraged further development of flake graphite projects outside of China," the consultancy said.

It pointed out that during the December 2018 quarter and early-2019, at least three projects completed feasibility studies, one updated its FS and several others completed prefeasibility studies, scoping studies, or resource updates.

Syrah Resources' Balama operation in Mozambique came online in late 2017 and is ramping up, producing its first un-purified product in December 2018.

Roskill said China imported about 60,300 tonnes of flake graphite in 2018, up from only 5,500t in 2017, with Mozambique accounting for some 93% of all Chinese imports last year.

"Africa provides a potential source of low-cost production as China's own mining costs continue to rise with increasing labour, energy, and environmental costs. China has a recent history of investing in Africa in other mining sectors and is investing heavily in infrastructure projects across the continent," the consultancy said.

Syrah is also moving closer to downstream production outside of China, having installed 5,000 tonnes per annum of milling equipment at its Louisiana battery anode material (BAM) plant.

Despite this progress, focus remains on China, with the country continuing to dominate global graphite production and demand. Almost all stages of the lithium-ion battery manufacturing chain are focussed on China and the country is by far the largest and fastest growing market for lithium-ion batteries.

China is also currently the only commercial-scale producer of synthetic graphite, which is almost only used in the anodes of lithium-ion batteries and is a "key material in the electric vehicle revolution", according to Roskill.

However, environmental concerns and closures in China are mostly focused on reducing wastewater pollution, which is associated with the processing of natural flake graphite into spherical graphite using large quantities of hydrofluoric (HF) and other acids as part of the purification process.  

"For synthetic graphite, closures combined with rapidly rising demand to result in an 800% rise in the price of synthetic graphite electrodes between January and October 20‌17 and, by May 20‌19, prices were still 135% higher than they were in early-20‌17," Roskill said.  

"Demand continues to rise as China's steel industry undergoes a landmark shift to higher amounts of steel production by electric arc furnace - technology which relies on synthetic graphite electrodes."

The consultancy added that the availability of needle coke for synthetic graphite production could also be constrained again from 20‌20 by pollution controls, with rising competition for the low-sulphur fuels used in the manufacture of petroleum-based needle coke production.

Both synthetic and natural graphite, as well as an increasing amount of needle coke and other existing carbon materials compete for use in lithium-ion battery anodes, with Roskill forecasting demand for raw material graphite in battery applications to grow 17-23% per annum between 2017 and 2027.

Roskill noted that while natural flake graphite mine developers outside China were considering the construction of plants using alternative, more environmentally-friendly techniques, which could reduce or negate the use of HF, high production costs and the use of strong acids and other reagents could hinder competitive commercial-scale output.

This could change if end-users became willing to pay a premium for a cleaner product.

Roskill also noted that, while Balama had produced its first un-purified spherical graphite, the operation still hadn't produced purified spherical graphite by early June.

Meanwhile, pollution concerns are also starting to impact India's graphite output, with synthetic graphite plants being closed due to concerns about air quality and the presence of potentially dangerous particles in proximity to the plant.

So far this year, a court ruling has closed Graphite India's graphite electrode plant in Bangalore due to pollution concerns, with Roskill pointing out this was the first major case of closure in the Indian market.

"Although it is unlikely that we will see sudden, widespread plant inspections and closures in India (as in China), we could see more closures brought about by local administration," the consultancy said.