A few factors for Cobra Plains coming b4 Nicand imho.
TON/Shandong - cos I dont think we can ignore the fact that Shandong r now heavily driving TON with the excellent work of Adrian Costello and his team, r now going the route of a STAGED DEVELOPMENT of Ancuabe, Cobra Plains and eventually Nicanda Hill;
Just how quickly Nicanda Hill follows Ancuabe/Cobra Plains is entirely up to Chinese graphite demand.
Thats of course if Yulong Mining, who have their foot on NH, comes to the party !!!
Now heres something even more interesting and gives rise to my assertion that perhaps its not just us waiting on Chiese backers that r seeling TONs sp being held.
From the ugly duckling to the beautiful swan! Graphite is rarely the center of attention in the mineral world, often overshadowed by the headline-grabbing lithium or cobalt, however the spotlight may be shifting to this unsung hero. Although not a metal, graphite is a versatile mineral used in various industries. This crucial raw material has a variety of uses, ranging from basic pencil manufacturing to complex development of lithium-ion batteries. The latter of which is experiencing significant growth in demand, primarily driven by the electric vehicle (EV) market.To put the importance of graphite in context, the battery of each EV on average requires 50-100 kg of graphite during manufacturing, typically utilised in the anodes, the negative electrodes of a battery. This vast quantity is roughly twice the amount of lithium required for the same battery.According to Macquarie’s Graphite Market Outlook, graphite demand is projected to grow at a compound average growth rate of 27% until 2030.
The US Geological Survey estimates that roughly 20-25% of graphite produced is used as an anode material in lithium-ion batteries, which further supports Macquarie’s prediction of significant growth for this valuable mineral, ‘We forecast a doubling in graphite supply over the next decade, with Africa being the largest source of growth. However, given demand growth, we believe a >300% increase in production is required to balance the market’.This growth will primarily be driven by the expansion of the EV market, it is estimated that demand will increase from 8.8 million cars in 2020 to 60.5 million cars in 2030, resulting in a price hike 25-50% higher than current values.It is likely that prices will remain relatively stable throughout 2023 before “rising over subsequent years.”
Currently there is a surplus of graphite in the market which is preventing a significant price hike in the immediate future.
Macquarie forecasts this surplus will be exhausted by 2025, thus thrusting the market into a deficit, spurring a bullish response.“We note that despite including a large portion of prospective supply within our forecasts, the market remains in deficit beyond CY25e, which is positive for pricing.
”This presents both opportunities and challenges for graphite producers as they strive to ramp up production to meet the surging demand. Although the future looks bright it is important to reflect on the recent market performance of graphite. When it comes to battery production, graphite is used at a similar rate as lithium, however it is yet to experience a similar trajectory.
The past couple of years have been tumultuous for the production and supply of graphite.
Despite this, several companies have been positioning themselves to take full advantage when the market conditions become favorable.One notable player is Syrah Resources (ASX-SYR), which according to Macquarie ‘stands as the only vertically integrated natural graphite active anode material supplier and producer outside of China at present’.Syrah has had a troubled start to the year with their share price tumbling 33%, a consequence of partial deactivation of equipment and reduced production at its Balama mine in Mozambique.
This drawback was a direct reaction to the unsettled Chinese market and increased inventories.
Prior to this, in 2022 Syrah had sold a record amount of natural graphite, 32% more than the year before.
“China’s natural graphite anode market has been under pressure since capacity for synthetic graphite production rose in the second half of 2022, with cuts in the subsidy for electric vehicle (EV) purchases then hitting demand.
”There was an increase in spot price between April 2021 and March 2022, however this quickly waned. This short-lived surge was curtailed by challenges including further synthetic graphite production in China and the withdrawal of Chinese EV subsidies which impacted the number of vehicles being sold.
During this period, large quantities of raw material were being stockpiled at factories across China. These factors resulted in reduced demand for natural anode material, impacting the market.
Syrah Resources managing director Shaun Verner summarized, China has “more domestic production capability than other battery materials.”It is important to note that Syrah has played a part in the stuttering graphite market, with previous management building the large scale Balama mine in Mozambique which threatened to inundate the market.
To negate this Verner has taken a pragmatic approach capping the volumes produced at the Balama mine to 50%.While the market demand for graphite has been underwhelming and far weaker than those who built the mine predicted, other external influences have set the company in good stead. The global trend of major economies taking a keen interest in critical minerals has not escaped graphite, nor Syrah.
The US government has financially backed Syrah in the construction of a graphite processing plant in Louisiana. The plant is anticipated to start production of ‘coated spherical graphite’ in early Q4 this year and in doing so will be the only non-Chinese source of the battery critical component, fetching an estimated US$ 5000-7000 a ton.
The possibility of an alternative graphite source has attracted EV giant Tesla to sign up for 8,000 of the 11,000 tons produced in Louisiana each year coupled with South Korean owned LG who has also snapped up an early deal to buy the product.
Towards the end of 2023 Syrah will take a final investment decision with a view to potentially expanding the Louisiana plant, which would make it four times larger than the current capacity and increase output to 45,000 tons per annum at a cost of over $US 500 million. This in turn would unshackle the Balama mine allowing it to achieve maximum production to supply the Louisiana plant with all the raw graphite material it requires.
Elsewhere, Renascor Resources (ASX-RNU), another key player is operating the Siviour Graphite Project in South Australia. The project boasts the world’s second-largest proven graphite reserve of 51.6 million tons, according to Macquarie. Currently, the company is working towards a Final Investment Decision with a view to expanding the production of purified spherical graphite (PSG). In late 2022 a capital raising campaign was undertaken to assist in funding the potential expansion, it was reported that the company has amassed AU$ 137 million.
Renascor has secured four non-binding purified spherical graphite offtakes with prominent anode manufacturers from China, Japan, and Korea, enhancing its market presence. These agreements reflect up to 200% of Renascor’s Stage 1 PSG production profile, demonstrating the company’s readiness to meet growing demand.
Talga Group (ASX-TLG) is leveraging the European Union’s demand for anode materials by progressing its Vittangi Graphite Project and Lulea anode refinery in Sweden. Talga’s vertically integrated operation aims to produce 19,500 tons per annum of anode material for the next 24 years. With its fully integrated mine-to-anode development approach, Talga is advancing its Talnode-C product, setting itself apart from competitors.
Within the Vittangi Project lies the Niska deposit which if developed could produce upwards of 84,000 tons per annum for 14 years.Talga Group’s managing director, Mark Thompson, outlines the company’s intention to break China’s monopoly in the graphite market. ‘Automakers are in a real bind because there’s been no investment in Western graphite’. Like Syrah,
Talga group is seeking to supply automakers, such as Tesla, Toyota and Ford, as well as battery producers such as Sweden’s Northvolt, Thompson told Reuters. Talga has secured non-binding supply agreements with two key European battery makers that have links with Mercedes-Benz, Stellantis and Renault.However, timing could prove to be Talga’s greatest enemy, it was initially reported that all mining approvals would be granted in 2022 with first production in 2024.
Macquarie has recently extended this timeframe with the first anode predicted to be produced in 2025.
It would be an oversight not to analyze how the Chinese market is responding to the major moves being made by international competitors who are determined to break their dominance in the graphite market.
Triton Minerals (ASX-TON) has entered a partnership with Shandong Yulong, who have a 34 percent stake in the company.
As the main investor, Yulong has committed to providing Triton expertise in, engineering, mining, marketing, as well as finance to the flagship Acuabe project in Mozambique.Triton has provided an update to 2017 definitive feasibility study (DFS), the revised figures outline a commitment to processing up to 60,000 tons per year of graphite concentrate.
The Executive Director of Triton, Andrew Frazer summarized the progress being made at the Acuabe Project which was granted regulatory approvals in mid-2019.Tritons Chief Executive stated” the company is encouraged by the outlook for graphite, noting there are supply shortages forecast from 2025 for both expandable and battery concentrates, with these markets having already seen a steady increase over the course of the past 12 months”.
The company’s estimated capital expenditure of US$ 99.1 million dollars is still on track despite global inflation which has impacted the wider mining community.
This announcement was shortly followed by the news of a JORC ore reserve of 24.9 Mt of graphite with a total graphic carbon grade of 6.2%.As it stands, Yulong remains the preferred Chinese debt arranger, as Yantai Oriental Metallurgical Engineering Company (YOME) will be undertaking the front-end engineering design.
“We know Jinpeng to be a highly capable engineering and manufacturing company which has direct experience in building projects in various jurisdictions throughout the world, but importantly in the graphite sector and specifically in Mozambique,” Mr Frazer said.
Presently, Triton are awaiting an environmental license, which will propel the mine into production and in turn will thrust the company alongside other big players in the graphite market.
As the appetite for critical battery metals remains strong keeping pace with the ever-expanding EV market, graphite will inevitably be taken along for the ride.
This is echoed by the projections of Project Blue who predict a graphite shortage is immanent, with a global supply deficit of 777,000 tons by 2030.
Simply put, a $12 billion dollar investment is needed by 2030, with 97 new mines in operation by 2035 to satisfy this demand according to BMI.
As outlined above several partnerships have formed with car manufacturers to secure supply which in turn gives confidence that this growth is set to continue.
“All the car companies are now scrambling to understand how to source battery materials at the mine level,” said Brent Nykoliation, executive vice president of NextSource Materials. -------------------------------------------------------------------------------
My question is:
Does the big insto bank discussed above hold ulterior motive when it comes to TON ?
TON has strong Chinese backing, and probably mainland China too.
Macquarie is obviously aligning itself with the WESTERN PROJECT DEVELOPMENTS.
I hope they arnt becos ............
I wont go into it, suffice to say Macquarie have far reaching investor influence !!!
So perhaps yet another reason TON has struggled right up until the end of last week it appears.
Me thinks theres change in the graphite winds of Mozambique.
(20min delay)