It’s always good to speak to your global peers – and we were certainly able to do that earlier in November, when we attended the 2017 Graphite Supply Chain Conference in Newport Beach, California.
Renascor Resources was one of the companies chosen to give a graphite project update and our managing director, David Christensen, took up the opportunity to update the audience on our Siviour project in South Australia.
Many of the delegates were hearing the Siviour story for the first time and the interest in Siviour at the conference was gratifying. David shared with the delegates the robust economics of Siviour and the fact that it is unique among peer Tier-1 graphite developments as being in the sedate political jurisdiction of Australia.
Siviour is among the largest reported graphite deposits in the world, with a shallow, flat-lying mineralised body. The orientation of the ore body should mean that Siviour has some of the lowest production costs of any similar project in the world.
We expect the flake size distribution and high purity of the graphite concentrates that we will produce at Siviour to suit well the lithium-ion battery market – which is burgeoning on the back of the electric vehicle revolution – and some of the other high-growth markets that are emerging for graphite.
David took the delegates through a macro story they know well: China dominates the supply of graphite but the market is restricted and unstable, with new safety and environmental regulations and export restrictions further reducing supply.
While other potential supply sources are opening up – indeed, we shared the conference stage with some of them – David was able to take the delegates through the highly appealing nature of Australia as a low sovereign-risk jurisdiction.
If a secure source of high-quality supply came on stream from Australia, it would be very attractive to graphite users.
David received many favourable comments about the project being based on the ninth-largest reported graphite indicated resource in the world as well as its location and proximity to excellent infrastructure.
David received several questions from the audience plus many more from fellow delegates at the social functions. The questioners all showed a receptive understanding of Siviour’s potential, most particularly the options it gives us for a staged development.
We left Newport Beach very confident that participants at the Supply Chain Conference understood very well the unique nature of our project.
Having recently raised about $3 million before costs in a share placement, we are well-positioned to progress the Siviour prefeasibility study.
We’re evaluating both the staged approach as well as an immediate large-scale option, with the start-up production scale to be determined after we complete the study. In our evaluation, we are taking into account the discussions we are having with potential offtake and finance partners.
The staged approach offers us a potential lower-risk alternative to a large-scale start-up by taking advantage of some of the key strengths of Siviour such as the shallow, easily accessible ore body and its proximity to South Australia’s infrastructure.
As we move towards completing the study and advance discussions with potential partners, we’re committed to evaluating all the viable options for bringing Siviour into production.
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 experience with the South Australian government is a case study of government working with business to help bring about a win-win situation.
Like any company, we talk to government about what we’re doing and where there is potential help – and we think we are a relevant candidate – we apply for assistance.
This year we have received 2 grants from the South Australian Government by way of programs that encourage economic development in the state.
We own the biggest graphite deposit in Australia by a factor of three and we are planning to mine that graphite for use in lithium-ion batteries, which will be used in power storage, mobile phones and electric vehicles.
Our plans for the Siviour deposit on South Australia’s Eyre Peninsula envisage starting mine construction in 2020 and getting the mine up and running by 2021. We expect it to have one of the lowest production costs of any similar project in the world.
And with global demand for graphite expected to triple by 2020, it’s a timely plan.
For the state government, our project is attractive because of its potential to create jobs on the Eyre Peninsula; not only in the larger centres such as Whyalla and Port Lincoln but also in the nearby smaller towns, such as Arno Bay, Cleve, Cowell and Tumby Bay.
That is the thinking behind the two grants we’ve been awarded this year.
In May, we received a $100,000 research grant to conduct mineral processing test work at Siviour. The grant came from the South Australian Government’s Future Industries Accelerator Research and Development Voucher Scheme, headed by the University of South Australia’s Future Industries Institute, which aims to accelerate the growth of local industries, especially in innovative areas that can benefit the state’s economy.
That funding specifically supports mineral processing test work we’re doing, with the aim of enhancing the Siviour mineral process flow sheet and finding efficiencies and cost reductions that could be applied to a full-scale operation.
The second grant, which was awarded earlier this month, comes from the Future Jobs Fund, a state government-sponsored program to support the development of globally competitive industries and industrial capabilities in South Australia.
We’ll use the $25,000 grant to develop a business case to support the building of a processing plant at Arno Bay to produce a high-quality, high-purity flake graphite concentrate.
Governments at all levels are under pressure to spend public funds wisely and we believe this is the perfect example of a government investment that could generate sustained long-term benefits.
According to our scoping study, the Siviour project would operate for at least 20 years. That is a lot of employment, with all of the flow-on benefits that brings to the Eyre Peninsula and the whole state.
The project life could be even longer than that. Since we announced our initial resource last year, our drilling has already quadrupled the ore inventory and there is substantial upside still available from undrilled areas.
We can’t yet say if we will be processing the graphite on-site as there is a lot of work to do in terms of the feasibility study, which is expected to be completed in the second half of 2018.
But with the wonderful support we’ve received from the state government, we’ve got every chance of turning our graphite deposit into an integrated operation supplying the world with advanced materials that have many exciting applications, and creating long-term, high-value jobs in South Australia.