BlackEarth Minerals (ASX:BEM) is positioning itself for a wider orbit, with a vision of becoming a major vertically integrated natural graphite player in the global graphite supply chain.
The company’s flagship Maniry Graphite Project is located in Southern Madagascar, where a Bankable Feasibility Study (BFS) is currently being finalised with a focus to deliver value-added products which are in high demand.
Having recently announced that it has materially increased its total graphite inventory at the 100% owned Maniry Project, BlackEarth is currently reviewing several downstream value-added graphite processing opportunities.
The opportunities for such a commodity are plentiful.
According to Geology.com, graphite is a naturally occurring form of crystalline carbon found in metamorphic and igneous rocks. Graphite is a mineral of extremes – it’s extremely soft, cleaves with very light pressure, and has a very low specific gravity. Conversely, it is extremely resistant to heat and nearly inert in contact with almost any other material. These extreme properties give it a wide range of uses in metallurgy and manufacturing, particularly in technologies regarding a decarbonised world.
Managing Director Tom Revy said that due to these characteristics, graphite is incredibly important to green technologies and global decarbonisation, and is a perfect commodity for a company like BlackEarth to add downstream processing to its capabilities.
Adding value down the supply chain
The MD explains that many mining companies have successfully developed downstream processing for traditional mining project products. Value adding has generally been expensive for most commodities, however both strategically and financially, shareholders have benefited from this development path.
“To be a material player in the downstream graphite supply chain starts with a quality mining asset”
“BlackEarth has always seen downstream processing as an integral part of its graphite strategy. To be a material player in the downstream graphite supply chain starts with a quality mining asset.
We have this with the Maniry Graphite Project, with its DFS due to be completed in October. Our first downstream project is a low-cost, low entry risk into the supply chain.”
Part of its strategy to enter the downstream supply chain is establishing an expandable graphite facility. The plan is to develop a plant that can produce, in the initial stages, 2,000-2,500tpa of expandable graphite then expand production capacity to potentially up to 5,000tpa.
Costing a total of US$3 million (BlackEarth’s share will be 50% of this under the JV terms with partners Metachem) the expandable graphite facility in India will enable the company to be cash flow positive by next year.
Revy said it will raise the company’s profile in the industry and will provide potential debt providers for the Maniry Project the comfort that BlackEarth will be a partial offtaker of its own product from Madagascar.
“There’s lots to like about that.”
As an integrated natural graphite player in the global graphite supply chain, the company’s objectives in the coming 3-5 years include commissioning the expandable graphite JV plant in India in 2023; commissioning the Maniry Graphite Project in 2024; and, then commissioning the battery anode material (BAM) plant in 2025/26.
The MD adds: “All of this will be done safely, responsibly, sustainably, and with as little dilution as possible for shareholders.”
This strategy is predicated on the emerging supply deficit for BAM required to make lithium batteries. Revy explains that the supply/deficit dynamics of the sector globally are an important consideration, “however each project opportunity must stand on its own 2 legs”.
“As stated earlier, our vision, since day 1, has been to build an integrated graphite company capable of being a material player in the global graphite supply chain.”
BAM! BlackEarth to crash global market
In early September, BlackEarth announced it had started a Scoping Study on building a plant to process graphite from its Maniry project in Madagascar into a product suitable for use in lithium batteries.
The study will assess the viability of building the plant in Europe, where demand for battery anode material is forecast to soar over coming years.
Revy notes that the strategy is aimed to enable the company to capitalise on the emerging supply deficit for battery anode material (BAM) required to make lithium batteries. The study is assessing the viability of building the plant in Europe, where demand for BAM is forecast to soar over coming years.
To put the importance of graphite into perspective, lithium-ion batteries used in electric vehicles (EVs) is made of 2 electrodes — an anode (negative) and a cathode (positive). At present, graphite is the only material that can be used in the anode and there are no substitutes, meaning graphite is somewhat indispensable as the world shifts towards EVs.
The MD said building the plant in Europe is likely to be the best viable commercial option as the region has both strategic and financial benefits to BlackEarth.
“The current list of battery gigawatt mega-projects is significant so it will place us at the heart of ‘battery central’. Reviewing a number of potential sites in Europe has unearthed a number of locations where attractive fiscal conditions and potential grants / subsidies can be realised.
While early stages at the moment, the opportunity for shareholders to benefit from substantially higher revenues by producing BAM is significant. The likely supply deficit in BAM, the ability to potentially provide suitable feed material from the Maniry Graphite Project (as concentrate) together with the industry demanding alternatives to China as a supplier of BAM, all bodes well for BlackEarth shareholders.”
“The likely supply deficit in BAM, the ability to potentially provide suitable feed material … together with the industry demanding alternatives to China as a supplier … all bodes well for BlackEarth shareholders”
BlackEarth has spent consider time and effort previously working with an independent German testing laboratory / engineering company – Dorfner ANZAPLAN, in order to determine the Maniry graphite concentrate suitability for the lithium-ion battery market.
The 10-month program demonstrated the suitability of the concentrate (fine) material for use in the sector. The Scoping Study recently announced is being undertaken by Wave International, a company experienced in the design / engineering of battery anode material (BAM) plants.
Wave is currently reviewing the battery test work data and will shortly commence incorporating this information into a costed scoping level study which is expected to be completed in Q4 2022.
The MD said that over the coming months, BlackEarth expects to release to the market information that includes the outcomes of the BAM Scoping Study, but also 2 major milestones – the final DFS for the Maniry Graphite Project in Madagascar; and the commencement of construction of the company’s JV expandable graphite facility in India.
Other announcements will relate to future development plans for the Maniry Project.
Once the plant is operational in Europe, Revy said there will be an “exceptional opportunity” to become a vital supplier to the lithium battery industry by processing Maniry fines into BAM. This would allow BlackEarth to sell a portion of its fines for about four times the price it would realise by selling them as a raw product to others to process into BAM.
By becoming vertically integrated in this manner, the company is poised to substantially increase revenues, margins, and free cashflow while becoming an integral part of the booming lithium battery industry in Europe.
Wave International is undertaking the BAM Scoping Study for the potential downstream processing of suitable graphite concentrate in Europe such as spheronised and purified graphite. Spheronised and purified graphite is considered a critical component in the lithium-ion battery supply chain. BlackEarth believes it has the potential to become a strategic supplier of high-value, ‘high-demand’ of this SPG into the European lithium-ion battery / electric vehicle (EV) markets.
The BAM plant has potential to add significant value to Maniry fines, which will account for 40% of total production. Preliminary studies show the BAM will sell for about US$3,500/t compared with US$850/t for the concentrate fine.
Graphite critical to decarbonisation
Revy explains that as the world embraces decarbonisation and looks towards EV and other greener technologies, natural graphite is ‘critical’ regarding its supply to achieving this.
“A variety of batteries and fuel cells are currently enabling technologies for low emission vehicles with their outlook expected to continue to grow exponentially in the coming years.
Key materials, especially graphite, will be needed in greater amounts for the manufacture of battery packs, fuel cells, electric vehicles, and hydrogen-powered vehicles. Without a doubt, graphite is a critical commodity required for global decarbonisation.
“Without a doubt, graphite is a critical commodity required for global decarbonisation”
As a company, we are conscious of our social and environmental obligations, so we see ourselves as part of the solution, not the problem.”
The outlook for graphite is very positive for the company. Industry specialists are forecasting a small supply deficit by as early as the end of 2022, which is tipped to grow further from 2023 onwards. Prices have already moved substantially since the beginning of 2022 largely in expectation of this looming deficit.
The MD explains that the majority of growth in demand is expected to come from the lithium-ion battery market, which is largely linked to EV production.
“Growth in this area alone is expected to be more than 25% per annum year-on-year. Demand for coarse flake graphite production (used in the fire resistant and foils industries) is expected to grow at a rate of 7%-plus per annum, while the refractory and foundry industries will grow in line with global GDP growth at 2% per annum average over the medium-term.”
In May, EIT InnoEnergy and European Battery Alliance Policy Manager Ilka von Dalwigk was reported as saying that natural graphite is forecast to move into a structural deficit as soon as 2023-24.
The International Energy Agency (IEA) said that growth in demand for selected minerals from clean energy technologies by scenario, 2020 relative to 2040, will see increases of graphite 8x to 25x.
Maniry materially significant
BlackEarth in July and August announced it materially increased its total graphite inventory at the 100% owned Maniry Graphite Project in Southern Madagascar with the completion of infill and extension drilling at both its Razafy and Razafy NW Resources.
The total Maniry Mineral Resource inventory now comprises 40Mt @ 6.5% Total Graphitic Carbon (TGC). The Razafy NW Indicated and Inferred Mineral Resource, comprising of 5.3Mt @ 8.5% Total Graphitic Carbon (TGC) at a 3% TGC cut-off grade has the majority of the resource classified with a higher confidence ‘Indicated’ classification.
Evidence of higher-grade material of about 9-10% TGC within the Razafy NW Mineral Resource has been a key focus for early mine feed into the current Maniry DFS due to be completed in October 2022.
Madagascar has more than 100 years of graphite production history. It is the largest supplier of graphite to China, the second largest supplier of graphite into India, and is in the top 5 suppliers into the US.
BlackEarth has a 40-year mining lease in Madagascar granted over the majority of the current Mineral Resources, where only 10-15% of the company’s total tenement position has been systematically explored to date.
As the company looks to turn on its axis and emerge as a globally integrated natural graphite player, it has plenty of room to expand its orbit in the sector.
Write to Adam Orlando at Mining.com.au
Images: BlackEarth Minerals Ltd & iStock