The Australian graphite sector is reaching a battery-driven inflection point, Renascor Resources says
Graphite has the potential to emulate the lithium boom, with a corresponding benefit for Australian miners, Renascor Resources boss David Christensen says.
Graphite’s time has come, Renascor Resources managing director David Christensen says, with its role in the battery supply chain fundamentally changing the economics of the mineral.
Until now, Mr Christensen says, graphite has been largely an industrial mineral, with most of the supply coming out of China.
A couple of South Australian projects made a fitful start in recent years, however soon sputtered to a halt, and according to Geoscience Australia, the nation currently does not produce any graphite, while the nation’s total ore resources are modest, spread across a handful of projects in South Australia, Queensland and Western Australia.
Renascor Resources is in the box seat to be one of the first, if not the first producer to begin exporting from Australia again, and recently received a Federal Government commitment for a $185m loan to develop its Siviour graphite project on the Eyre Peninsula.
The project is not just a mine however, with the company also intending to build and operate a battery anode material manufacturing facility at a yet to be determined site also in SA, greatly value-adding to the product it will sell.
The company also recently raised $65m in a placement to investors, and is well funded to bring the $205m project into production.
READ MORE: Sofitel Adelaide targeting $160m sale
Mr Christensen said the demand which lithium had enjoyed in recent years, and the supply gap, was something which the graphite market would likely emulate.
“Graphite was probably one of the first battery minerals to excite the investment world back in 2014/15, everybody dusted off the old projects,’’ he said.
“But what became apparent was the transition of graphite from an industrial mineral to a battery mineral was a few years away.’’
Mr Christensen said graphite was still primarily an industrial mineral but the market was “at the cusp of the switch right now’’.
About 80 per cent of the mineral still goes into the low-growth industrial market, however the battery market was growing rapidly, especially in value-added areas such as purified spherical graphite (PSG) which Renascor will be producing.
“That gives us 100 per cent exposure to the high-growth area,’’ Mr Christensen said.
Mr Christensen said graphite sat in a potentially similar area to lithium before its boom, however the market for value added products was quite opaque, with all of the downstream processing happening in China.
“But you have a similar position where you need more graphite ... what really puts us in a good position is it looks like from a deposit point of view, what we have on the Eyre Peninsula really stacks up against anything in the world.’’
Renascor is currently planning for initial stage one production of 28,000 tonnes per year of PSG, which is used to make anodes for lithium-ion batteries.
In its most recent quarterly report, the company said the price of PSG was sitting at $US3500-$US3800 per tonne, which was up by 40 per cent in just six months. This compared to $US800-$US1200 per tonne if the company was to sell the mined graphite material.
Mr Christensen said the “quality of your customer’’ also improved at the higher end of the market, with offtake deals with major battery producers possible.
Renascor’s project siting in Australia also held it in good stead on the ESG front, with battery producers wanting to make sure their supply chains were ethically and environmentally sound.
Mr Christensen said the focus for Renascor currently included updating the 2019 study it did on the project to enable the company to make a final investment decision.
“That will involve expanding the production base,’’ he said.
The company already has a mineral lease and is waiting on state government sign off for its environmental program, and for the downstream processing plant it is also looking at final site selection.
“And on the offtake side, this is probably the biggest change that we’re seeing, the market’s just sort of exploded,’’ he said.
“When we did the initial study we were looking at producing just under 30,000 tonnes of material.
“Now we have four announced non-binding offtake agreements for double that. POSCO alone could take 30,000 tonnes.
“Things are starting to get really exciting. It hasn’t gotten to the extent of the demand we’ve seen in lithium but it shows every sign of getting there.’’
Mr Christensen said the company would look to move some of its non-binding offtake agreements to binding ones.
“And that will justify not only an expanded production but staged production.
“From a demand point of view, based on last year’s numbers, by 2030 you would need 90 projects of our size.
“With the scale of our resource, it’s a 40 year mine life, we could easily double, treble.
“Part of the capital raising was to expand the resource base so we can meet some of that 90-fold increase. There’s a huge demand gap that needs to be filled.’’
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout