Many growth areas make this a great time for graphite

Sitting on a tier 1 graphite asset is a great position to be in when global demand for the mineral is poised to surge.

Graphite is often spoken about in terms of its use in lithium-ion batteries and the expected growth in demand driven by electric cars the imperative for utility-scale batteries designed to store intermittent wind and solar energy.

Despite their name, lithium-ion batteries contain far more graphite than they do lithium.

But there are more uses than lithium-ion batteries driving graphite demands. A whole range of high-tech growth areas need graphite:

  • Expandable graphite: A synthesised compound of graphite that expands when heated, expandable graphite is used as a fire suppressant additive. It is also used as a raw material to manufacture graphite gasket products, as an electrically conductive filler, as a foundry additive, and in a wide range of other industrial applications.
  • Graphene: Since it was first isolated in 2004, graphene has captured the attention of scientists, researchers and industry worldwide for its mix of qualities. At just 1 atom thick, it is the thinnest material possible and is also transparent. Graphene is ultra-light but extremely strong – 200 times stronger than steel – and highly flexible. It is both a superb conductor and a very effective barrier material – not even helium can pass through it.
  • Super capacitors: Super capacitors are double-layer capacitors that can store electrical energy and some indications are that super capacitors could even surpass batteries for energy storage.
  • Pebble bed reactors: The pebble bed reactor (PBR) is a very high-temperature nuclear reactor that uses small graphite spheres that encase thousands of tiny “pebbles” of uranium fuel. The graphite coating protects the fuel from breaking down so the PBR is immune to meltdown. The first commercial-scale PBR, built by China’s Nuclear Engineering Construction Corporation in Shandong province, is expected to start generating power before the end of this year.

Driven by these factors, investment bank UBS expects the global graphite market – currently a US$16.2 billion ($20.5 billion) market – to grow by between 1.7 times and 2 times by 2025.

Research firm BCC Research says the electric vehicle and energy storage markets are undergoing huge shifts that are reorienting the graphite industry, particularly in the natural graphite market. BCC Research expects the global market for graphite to grow at a compound annual growth rate of 7.7% over the period 2016-2021, driven by 24.7%pa growth in electrical applications.

The firm says electrical conductivity properties are ushering in a large new market for graphite in the field of energy storage applications. Additionally, mobile phones and other electronic equipment require power and energy storage devices, and graphite is at the forefront of meeting these needs.

Among all battery technologies, BCC Research says lithium-ion battery technology excels for its ability to store large quantities of power in limited space while quickly powering devices and equipment: these batteries use between 30 grams–40 grams of graphite for each gram of lithium used.

Given that we own the biggest graphite deposit in Australia by a factor of three – and the ninth largest reported graphite indicated resource in the world – these are highly exciting numbers.

We plan to start mine construction at our Siviour project on the Eyre Peninsula in South Australia by 2020 and have the mine up and running by 2021 at one of the lowest production costs of any similar project in the world.

Development of the Siviour project remains on schedule.  We are currently completing an accelerated small-scale start-up study, as well as a scoping study regarding the production of spherical graphite.  Results of these studies are expected this quarter, with the completion of the pre-feasibility study expected shortly thereafter.

Our Siviour graphite deposit can spark the battery market

With global demand for graphite expected to triple by 2020, the carbon material is certainly hot property.

The main driver of demand is lithium-ion batteries, which are used in the burgeoning electric vehicle industry, but which also have growing use in consumer electronic devices as well as applications with renewable energy and grid storage.

But the increased uses for graphite come with a few caveats on the supply front.

China dominates current supply at 70% of the market. Brazil contributes 15% with Canada and India supplying 5% apiece.

The graphite market needs secure supply. While there are substantial emerging large-scale graphite developments in Africa, the sovereign risk there was highlighted by new mining laws in Tanzania that give the government increased free-carried equity interests and further authority to renegotiate mining concessions.

The new Tanzanian laws – and continuing political uncertainty in Mozambique, which is also a graphite province – highlight Australia’s low sovereign risk.

And this is where our Siviour deposit in South Australia comes in.

Discovered only last year, Siviour is a world-class deposit in terms of size, quality and cost.

It is the world’s ninth largest indicated graphite resource and the largest JORC-compliant resource in Australia.

Siviour weighs in at 80.6 million tonnes of ore at a grade of 7.9% total graphitic carbon (TGC) for 6.4 million tonnes of contained graphite.

Moreover, the deposit’s flat laying orientation underpins a low cost of production.

According to the scoping study, Siviour could produce at a cash cost of $450 (US$333) a tonne, one of the lowest costs of production of any graphite development globally and the lowest of any reported development outside of Africa.

With the low cost of production, the payback period is estimated at only 1.7 years.

The location in South Australia – on the Eyre Peninsula, roughly between Whyalla and Port Lincoln – comes into its own, with a stable political environment, skilled workforce, access to established infrastructure and proximity to established industrial centres for advanced processing.

It’s no coincidence that Tesla’s Elon Musk has announced plans to build the world’s biggest battery in South Australia.

And with metallurgical results confirming Siviour’s potential to produce high-quality, high-purity graphite concentrates for sale into the lithium-ion battery sector and other high-growth market segments, it’s a market we’re looking forward to joining too.

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