Graphite prices dropped to their lowest point in years earlier in 2017, but according to Andrew Miller of Benchmark Mineral Intelligence, prices have gone up “quite considerably” in the last few months.
Miller said the higher graphite grades of +80 and +50 mesh have seen the biggest increases, though prices for lower-grade -100 and +100 mesh material have also been rising. He noted that prices currently range from about $600 to $1,400 per tonne depending on grade.
The decline in prices earlier this year came after China removed a 20-percent export tax on flake graphite, allowing producers to export at prices 20 percent lower than current market rates.
Since then there have been “some [mine] closures in China and in Madagascar,” and prices have been picking up. “The environmental protection that you’ve been seeing in quite a lot of other mineral industries has also been affecting graphite, and ultimately has taken a lot of capacity out of the market,” he noted.
China was the top graphite producer in the world last year, and Madagascar was also one of the top 10 producers. Madagascar is home to a number of companies advancing graphite projects, including Bass Metals (ASX:BSM), DNI Metals (CSE:DNI) and NextSource Materials (TSX:NEXT), which recently released an updated feasibility study for its Molo project.
Miller said that elsewhere in Africa three other graphite projects are getting ready to begin production. Commissioning at AMG Advanced Metallurgical Group’s (AMS:AMG) Ancuabe graphite mine in Mozambique, was completed in May. Meanwhile, Imerys Graphite & Carbon is starting up a mine in Namibia through a joint venture with Gecko Graphite Namibia.
Syrah Resources (ASX:SYR), which plans to begin production at its Balama graphite project in late Q3 or Q4, is also getting a lot of attention. Miller said Benchmark doesn’t expect to see huge volumes from any of those projects initially, though production is expected to ramp up in the future.
Moving forward, Miller sees electric vehicles being one of the main areas of demand growth in the graphite market. He anticipates more flake feedstock being required to create value-added products and spherical graphite for batteries.
“It’s really a lot of that new value-added capacity in China coming online, and that’s requiring a lot more raw material feedstock,” he said. Demand for expandable graphite is also rising.
Miller also said the anode market is split between natural graphite and synthetic graphite, and explained that battery producers and anode producers are working on trying to refine the process. He expects there to be a lot of development in that space over the next few years.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.
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