Graphite is on the canvas, but as prices rise Aussie producers will be cost competitive

Australian graphite producers will be competitive with non-Chinese producers as batterymakers seek alternative supply sources
Costs will average US$550/t, according to Benchmark Mineral Intelligence, which thinks prices could more than double to US$880/t by 2034
Renascor Resources, Kingsland Minerals and Quantum Graphite among the most advanced domestic players

Graphite has been a metal for the true believers but the group of Australian companies that have kept the faith are set to be rewarded.

Prices have remained depressed at below US$500/t due to subdued demand and oversupply.

Benchmark Mineral Intelligence senior graphite analyst Camila Cardili told a webinar last week that most producers were underwater at current price levels, but it was likely that prices had found a floor.

The average C1 cost of producers in China, which dominates graphite production, is less than US$250/t, while average costs for assets outside China is US$570/t, mainly due to cheaper power, labour and consumables in China.

“The cost curve is expected to shift in coming years,” Cardili said.

By 2034, Cardili said most assets outside of China would sit in the third and fourth cost quartiles.

She said costs for Australian assets were expected to average US$550/t, which was competitive when compared to other non-Chinese projects.

“Australia is expected to become a new hub for flake graphite supply,” she said.

“When we compare, for example, African projects and Australian projects, they not only represent the lowest capital intensities, but they also figure among the lowest operating cost assets.”

Cardili said North American and European assets were expected to be higher capital intensity and have higher operating costs.

“Projects with higher capex intensity will require higher incentive prices to ensure they can be brought online successfully in the future,” she said.

Benchmark is expecting to see reducing surpluses in graphite and eventual deficits, forecasting a 2034 incentive price of US$880/t.

“When the supply-demand reaches deficit, we expect to see prices getting to this level to support these new projects, to be able to not only come online, but operate at healthy levels in the future,” Cardili said.

Australia’s first graphite hub?

South Australia’s Eyre Peninsula is home to an estimated two-thirds of Australia’s graphite resources.

It’s also home to Australia’s most advanced project, Renascor Resources (ASX:RNU) Siviour battery anode material project.

Siviour has a post-tax net present value of $1.5 billion and Renascor expects it to be one of the world’s lowest cost projects with costs of US$405/t of graphite concentrate in the first 10 years.

Renascor is advancing optimisation studies and is also looking to commission a purified spherical graphite (PSG) demonstration plant later this year.

Earlier this month, Quantum Graphite (ASX:QGL) and partner Sunlands Energy Co’s Eyre Peninsula Graphite Hub joined Siviour in being granted major project status.

The centrepiece of the proposed hub is Quantum’s shovel-ready Uley 2 project, which the partners are progressing towards first production of 100,000tpa of high-purity graphite in early 2027, with Sunlands to build a refinery in South Carolina.

Similar to Sivour, Uley 2 is forecast to have operating costs of US$401.14/t.

Elsewhere, Lincoln Minerals (ASX:LML) says its Kookaburra graphite project benefits from the Eyre Peninsula’s infrastructure, including power, water, town and airport and port access.

The company’s 2024 prefeasibility study returned C1 operating costs of US$517/t and a free cashflow break-even price of around US$655/t.

While at an earlier stage, iTech Minerals (ASX:ITM) has recently initiated a new round of drilling at its Eyre Peninsula graphite project.

The project already has a measured, indicated and inferred resource of 35.2Mt at 6% TGC for 2Mt of contained graphite.

iTech is also producing up to 30kg of graphite concentrate from the Lacroma Central deposit, which will be used to supply potential offtake partners with both >94% TGC flake concentrate and unpurified spherical graphite.

The company described securing offtake as the next critical step in moving the project towards production.

Making rapid progress

In two years since discovery, Kingsland Minerals (ASX:KNG) has grown its Leliyn project in the Northern Territory into Australia’s largest graphite deposit.

Leliyn has a resource of 194.6Mt at 7.3% total graphitic carbon and an exploration target of 700Mt to 1.1 billion tonnes at 7-8% TGC.

Last week, Kingsland sent a bulk sample of Leliyn graphite concentrate to Germany for extensive metallurgical tests to produce purified spherical graphite, a process which is expected to take around five months.

The results will feed into a scoping study into the production of fine flake graphite.

Kingsland managing director Richard Maddocks previously told Stockhead he expected Leliyn to be low-cost, as the large, shallow nature of the orebody was likely to lead to a low strip ratio.

The project is only 250km from Darwin port.

Kingsland is backed by new 15.3% shareholder Quinbrook Infrastructure Partners and together the pair are looking at developing downstream processing capacity in Darwin.

WA projects moving along

The most advanced project in Western Australia is International Graphite’s (ASX:IG6) Springdale project near Hopetoun in the state’s south, which is moving towards a definitive feasibility study this year.

A January 2024 scoping study outlined competitive all-in sustaining costs of US$485/t.

IG6 is also building a pilot-scale, 3000tpa graphite micronising and spheroidising plant at Collie, which is fully funded via government grants.

Japan’s Marubeni Corporation recently visited Springdale and Collie and coordinated purification test work of Springdale graphite, which achieved battery grade specification more than 99.95% purity.

While Mineral Commodities (ASX:MRC) is suspended from trading, it is looking to make the Munglinup graphite project in WA its sole focus by buying out its joint venture partner.

While stalled, the project is advanced with a 2020 DFS identified operating costs of US$491/t.

Green Critical Minerals (ASX:GCM) has earned 80% of the McIntosh graphite project, northeast of Halls Creek, but is in a dispute with minority partner NH3 Clean Energy.

GCM has since switched its main focus to downstream processing after acquiring an advanced-stage graphite technology which produces very high-density graphite blocks from graphite powder.

The company has recently advanced thermal performance and density tests and believes the VHD technology has the potential to outperform and replace materials like copper and aluminium.

At Stockhead, we tell it like is is. While iTech Minerals, Renascor Resources and Kingsland Minerals are Stockhead advertisers, they did not sponsor this article.