Flake graphite market moves into deficit: Evolution Energy

Wed 21 Sep 22, 12:32pm (AEST)
Pile of graphite
Source: iStock

Key Points

  • Graphite fine flake prices rallied 56% between September 2021 and June 2022
  • Evolution operates the Chilalo Graphite Project in Tanzania
  • A final investment decision for Chilalo is expected to take place in the March quarter 2023

Driven by demand for batteries and electric vehicles, the market for flake graphite has shifted into a deficit, according to Evolution Energy Minerals (ASX: EV1).

The deficit has pushed fine flake prices up 56% to approximately US$825 a tonne between late 2021 to June 2022. The price rise stalled in July and August as China, the world's largest supplier of graphite, entered into its peak mining season.

Graphite prices
Source: Evolution Energy Minerals

"Mine supply in China will reduce substantially during the Chinese winter from November to February and as a result, the outlook for graphite prices across all flake sizes remains favourable," Evolution said in a statement.

Separately, Benchmark Minerals Intelligence estimates that approximately 97 new natural graphite mines and 54 synthetic graphite plants need to come online by 2035 to "keep up with the exceptional volumes of demand" for electric vehicles and renewable technologies.

Graphite supply versus demand
Source: Benchmark Minerals Intelligence

"It is within this market context that the Company is seeking to develop Chilalo [Graphite Project]."

Introducing the Chilalo Graphite Project

Chilalo is a well-advanced graphite project in Tanzania with upcoming catalysts including:

  • Execution of a Framework Agreement with the Government of Tanzania

  • Completion of an updated Definitive Feasibility Study (DFS) and Front-end Engineering Design

  • Project financing

A final investment decision for Chilalo is expected to take place in the March quarter, 2023.

The outdated 2020 DFS expected the project to produce 50,000 tonnes per annum of graphite concentrate, with a mine life of 18 years and net present value of US$323m.

Running up the value chain

Recent testwork and qualifications have confirmed the suitability of Chilalo's graphite for applications including graphite foil, hydrogen fuel cells and battery anode materials.

“Not all graphite is created equal and determining suitability for use in high-value applications is a matter of testwork and qualification," said Evolution Energy's Managing Director, Phil Hoskins.

"Whilst the supply of flake graphite concentrate produces solid margins, the real opportunity lies in leveraging our high-quality graphite with proven technology to produce value-added products," he added.

Evolution said it plans to advance both the development of the Chilalo Project and value-accretive downstream business strategies.

The company has commenced a review of potential downstream locations and currently mining a 500-tonne bulk sample of Chilalo ore for product qualification initiatives for both lithium-ion and alkaline battery manufacturers.

Separately, Evolution is well-advanced in its discussions with its cornerstone offtake partner, Yichang Xicheng Graphite Co about a joint venture to manufacture downstream graphite products.

DISCLAIMER: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Evolution Energy Minerals was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice. A staff member at Market Index indirectly holds shares in Evolution Energy Minerals.


Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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