The price of natural flake graphite rose in June and July after declining in May, but the general feeling in the market is that prices for all grades are softening. Industrial Minerals reported that the price of large-flake graphite (+80 mesh, 94 to 97 percent carbon) was between $2,500 and $3,000 a tonne on July 26. That’s comparable to prices for the same grade seen in June.
Prices of $2,100 and $2,600 per tonne of concentrate represent the 24- and 12-month weighted average price for the various sizes and grades of flake graphite, data from Industrial Minerals states.
Graphite prices declined in May, their first fall since March 2009, as demand from Europe and China slowed. Graphite is not traded on an exchange and prices are negotiated between buyers and sellers, making it difficult to calculate and obtain pricing information.
Graphite demand to grow exponentially
Within the past year, about 40 companies looking for graphite have listed on Canadian stock exchanges. Use of this critical mineral in lithium-ion batteries, pebble-bed nuclear reactors, and electric vehicles is expected to grow exponentially in the coming years. And demand for these applications will be much higher than demand for graphite for steel and automotive applications.
According to industry estimates, current graphite production is about 1.1 million tons and is growing at about 5 percent a year. About three-quarters of global graphite production comes from China.
Demand is seen reaching 1.6 million tons in just under five years if new applications for graphite take hold. And with China controlling the majority of production, there are fears that the country could restrict exports, leading to a supply disruption.
“If the demand for the different products in which graphite can be used – for example, lithium-ion batteries – actually comes to fruition, then yes, I believe China will establish export quotas, because it will need graphite for its own internal production,” Glen Jones, executive director for the Western hemisphere at Intierra Resource Intelligence, said in a recent interview with The Critical Metals Report.
Energizer Resources (TSX:EGZ) intersected 421.3 meters of graphite mineralization with a grade of 6.12 percent carbon at its Molo deposit in Madagascar. Results from the first three holes confirmed that the Molo deposit is exposed at surface and extends to a vertical depth of over 300 meters, which should allow for cost-effective open-pit mining. Energizer expects that a resource target of more than 100 million tonnes grading over 6 percent carbon is obtainable for the Molo deposit by the fourth quarter of this year.
Australia’s Gold Anomaly (ASX:GOA) said a large graphite deposit is located within its Golden Gate project in Croydon, North Queensland. The deposit contains 20 Mt of 5.5 percent graphite, including a high-grade zone of 6 Mt of 10 percent graphite, but these estimates require substantiation by further drilling.
Standard Graphite (TSXV:SGH) said it has started exploration work at its flagship Mousseau East property in Quebec. It is expecting the survey results in the near future and is prospecting and mapping the area geologically to find further targets and to get a better understanding of the graphite trend’s geometry.
Focus Graphite (TSXV:FMS) started drilling at its Lac Knife graphite project in Quebec. The company currently has a NI 43-101 compliant resource estimate of an indicated 4.9 million tons at 15.8 percent cgr (carbon as graphite) and an inferred 3 million tons at 15.6 cgr. Drill results will be used to update these figures, which were published in December 2011.
Securities Disclosure: I, Karan Kumar, hold no direct investment interest in any company mentioned in this article.