Archer Exploration thinks it can shave $14 million off the total cost of its Campoona graphite mine in South Australia by pursuing a toll treatment deal in North America.

The company (ASX:AXE) has been exploring its options to reduce the capital costs of the project.

Test work undertaken by partner Urbix Resources has successfully increased the total carbon content grade of the Campoona graphite to over 98 per cent, from 93 to 94 per cent previously.

Archer says Urbix’s technology provides it with the opportunity to toll process Campoona graphite in North America, reducing the capital cost for the Sugarloaf graphite processing facility and reducing Archer’s environmental footprint on the Eyre Peninsula.

Toll processing is where another company processes the raw material under contract, meaning a miner doesn’t have to build their own processing plant.

“The potential capital cost benefits of producing high-purity graphite concentrate through Urbix’s proprietary processing method are estimated at approximately $14 million over the
life of the Campoona graphite project,” the company told investors.

Archer Exploration (ASX:AXE) shares over the past year.
Archer Exploration (ASX:AXE) shares over the past year.

Graphite has been a bit slow to gain traction on the back of the electric vehicle uprising, but market forecaster Roskill says graphite demand is about to experience “rapid growth and price escalation”.

Rapid growth in demand for graphite in lithium-ion batteries is predicted to underpin graphite demand growth of 5 to 7 per cent annually between 2017 and 2027.

Lithium-ion batteries use about 40 times more graphite – used in the anode – than lithium.

Roskill says that by 2027, graphite use in batteries could be five to 10 times higher than the current level, depending on the uptake of lithium-ion batteries in electric vehicles and other applications.

Archer has been contacted for comment.

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