Is Graphite Going Global?

China’s exports of the spherical graphite popular with lithium ion battery makers have been on the rise in recent months.  This includes both uncoated and coated versions.  According to industry research firm Fastmarkets, total exports from China were 26,168 metric tons in the first five months of 2019, compared to 22,555 tons in the same period of the previous year, representing a 22.5% increase.  With prices holding relatively steady, it could be concluded that the increase in production has been soaked up by increased demand from battery producers.

Looking further back into the supply chain, Syrah Resources (SYR:  ASX) recently signed an off-take agreement with Hong Kong’s Gredmann Group for natural flake graphite from Syrah’s mine in Mozambique.  Gredmann will be getting a total of 279,000 metric tons over a three year period.  Pricing was not disclosed. 

After becoming the largest producer of natural flake graphite in the world with its Mozambique project, Syrah has been a closely watched player in the graphite sector.  The entrance of such a large project into active production could have a significant impact on the objective of several companies around the world to produce meaningful supply of battery-grade graphite outside Asia.

Natural Flake Graphite

Despite pronouncement of plans to develop a purified graphite product and produce battery-grade anode material at a plant in Louisiana, Syrah has yet to bring it to market.  Syrah is selling graphite concentrate to Gredmann.  That said, in April 2019, Syrah management announced plans to produce purified spherical graphite at the Louisiana plant by the end of June 2019.  Management has promised to provide an update with the June quarter financial report.

Tennessee is the location for another graphite purification plant under development by Coulometrics, Inc., a toll coating and converting line for battery materials.  Coulometrics has teamed up with battery test equipment maker, Novonix, Ltd. in a joint venture the two have named PUREgraphite.  The duo plans to develop and manufacture anode materials for electric vehicle batteries.  

Novonix leadership has declared the joint venture will be the first significant battery graphite materials supplier outside Asia.  Plans are to begin commercial operations as early as summer 2019, which puts PUREgraphite into direct competition with Syrah’s Louisiana plant for that honor.

Coulometrics has been working on battery grade graphite production for some time.  In October 2016, Elcora Advanced Materials (ERA:  TSX.V) announced its cooperation with a group of graphite minerals developers in an effort to set up a spherical graphite test facility in at Coulometrics battery production and test facility in Tennessee.  In that month the group reported having acquired and installed micronizing and spheronizing mill equipment.  Included in the group were Northern Graphite (NGC:  TSX.V), Nouveau Monde Mining Enterprises (NOU:  TSX.V), and Battery Minerals (former Metals Africa and now listed as BAT:  ASX).  Also included in the group was the engineering firm, Pyrotek, Inc. (private), which operates a graphitization facility near Niagara Falls, New York. 

There has been no news since from the group.  However, Elcora has continued to work on graphite minerals development and to test its own battery grade graphite materials.  Most recently the company announced a joint venture with Eminent Minerals’ interest in the South Nachu, Tanzania graphite deposit.  The agreement will give Elcora access to graphite from the project with the intention of processing graphite at that site.  Elcora has also moved ahead with materials technology.  Most recently the company entered into an R&D agreement with Solargise Canada, Inc. to work on graphite and graphene materials to improve efficiency in Solargise photovoltaic panels.

Spheronized Graphite for Battery Anodes

Likewise Northern Graphite has made no additional disclosures vis-à-vis the Elcora consortium.  Northern has not given up on graphite materials.  In January 2019, the company filed a patent application for a proprietary graphite purification technology to protect the use of chlorine in a specially constructed fluidized bed reactor designed by the engineering and design firm, Hatch, Inc.  Northern has secured a permit to mine graphite from the Bissett Greek project in southern Canada.  In May 2019, the company announced the engagement of a financial advisor to explore financing and strategic alternatives for the project.

Northern is not alone in planning to use a fluidized bed reactor (FBR) for the purification step.  Westwater Resources (WWR:  Nasdaq) has indicated the preference for FBR technology, in which a fluid is passed through a solid granular material at high velocities to suspend the solid and cause preferred chemical reactions.  However, chlorine is not likely to be a part of Westwaters’ process given safety concerns in the transport and storage of chlorine. It is an energy-hungry process, but Westwater benefits from the availability of hydroelectric power near its graphite project in Coosa County, Alabama.

In the meantime, Westwater has planned a pilot purification plant with the objective of getting the plant in place by the end of 2019.  Supply from this low-volume plant will be used to produce sample materials for customer testing and eventually finished materials for initial commercial orders.

Westwater continues to make progress with its purified graphite materials.  In April 2019, independent testing of the Company’s Spherical Purified Graphite (SPG) product confirmed previous test showing graphite purity up to 99.95%.  Natural flake graphite from the Company’s Coosa project was used to produce the SPG.

There are others in the race to develop battery-grade graphite.  Kibaran Resources (KNL:  ASX) has been testing materials produced using its proprietary EcoGraf purification process.  A patent application is pending for the process.  Kibaran is developing the Epanko graphite project in Tanzania.

A discussion of battery-grade graphite would not be complete without mention of Focus Graphite (FMS:  TSX.V, FCSMF:  OTCQX), which began developing its Lac Knife graphite deposit over seven years ago.  The company has also developed a proprietary purification process that does not use chemicals.  In March this year, Focus Graphite representatives presented details at the 36^th Annual International Battery Seminar in Florida on the performance of silicon enhanced and boronated graphite from its Lac Knife project.

Is graphite going global or does China still have the graphite supply chain under lock and key?  Perhaps China still remains the locus of battery graphite today, but there are plenty of players trying very hard to set up shop elsewhere.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.