The problem is the opaqueness of the graphite market with the exception of what is published from sources in China on bulk graphite powder sales, which reflect the lowest prices.
You cannot achieve an true "offtake" in natural flake graphite due to the variations in ash composition, mesh size fractions, and metallurgical attributes. All of which can vary significantly within the mine signature. No end user is willing to place financial resources and risk into a project with variations, that has to produce a finished graphite concentrate product, that has not been commercial proven. Natural graphite is not like iron ore, lithium, cobalt, gold, silver, or even crude oil in which the customer purchases the ore or base material and refines it themselves.
Lab or pilot plant qualifications are only indicators until commercial bulk production qualifications can be achieved. There is a wide difference between an lab or third party pilot concentrate produced verses a commercial production which have into account many factors on a increased volume scale. This is where the main issues can arise in natural flake graphite concentrate production, especially hitting LOI targets, mesh size fraction targets, etc.
From direct experience, any financier whether a private firm or a bank, requires 3 to 5 years of sales history or true "take or pay" sales agreements...True take or pay sales agreements do not exist in the traditional space of the graphite market due to wide availability with no unique requirements. The more specialized or specific the product is in specifications, packaging, etc. will demand a true take or pay agreement as the product is so unique it is not readily available from all suppliers.
Graphite prices rising are a result of economical and external factors, and not fully on a shift in the natural flake graphite demand / supply curve. There are regulatory pressures in the Chinese graphite space, but with the amount of available capacity from the larger Chinese flake graphite suppliers, keeps the supply curve in check.
There will be ebb and flow in graphite market prices as it relates to the steel industry, but there are many other applications where prices are not readily available such as in friction, dispersions, lubricants, polymers, pencil, and ceramics. The only prices you easily obtain are bulk refractory grade graphite products that can have a wide range of specifications.
Almost all financiers do not have the resources or information to be able to absorb the associated risks with natural flake graphite production, and even though there are many start ups touting their battery suitable graphite, they do not have the capability to produce and advance graphite products, and can only rely on selling concentrate to Chinese processors at open market prices, thus not able to enjoy the added value margins that accompany advanced graphite products.
Once any start up can achieve a full suite of production capabilities including mining, processing, added value including SPG and coating operations, they will have a significant lead on others with only a mining and processing operation.
To date and to my knowledge, there have been no financiers willing to engage in debt financing of a new natural graphite operation with their current mind set of not completing understanding the graphite market as well as their increased level of risk averse. Even if they do consider debt financing, the interest rate (double digits) and additional royalties demanded make any debt financing expensive and cost prohibitive.
Equity is the only logical way to fund a new start up and very, very few have been able to achieve any level of equity to fund a new start up. Whether any of those projects will be successful, has yet to be seen.
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