Large flake gives Triton an edge in graphite stakes
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Special Report: Triton Minerals (ASX:TON) is buoyant about the pricing outlook for the large flake graphite it will produce from its Ancuabe Project in Mozambique as Chinese supplies diminish and demand for expandable graphite products increases.
The graphite industry spotlight has been on price weakness recently, with the largest producer outside of China, ASX-listed Syrah Resources, last week curtailing production in response to “a sudden and material decrease” in the spot natural flake graphite price
Syrah produces a fine flake graphite from its Balama mine in Mozambique that doesn’t command the premiums that larger flake size products do.
Triton Managing Director Peter Canterbury, who has been in Germany attending the Graphite 2019 conference, said the sentiment around larger flake size graphite remained overwhelmingly positive.
“The bulk of supply at the moment is coming out of Shandong Province [in China] and they are running out of large flake,” he said.
“There is some capacity being added in Madagascar, but the view from the likes of Roskill is that there will be a need for several more projects to meet demand.”
In its presentation to the conference, Roskill noted that average quarterly prices for large flake graphite increased by 26% from Q2 2016 to Q2 2019, while prices for medium flak increased 18% and prices for fine flake increased by 5% over the same period.
To illustrated the premiums associated with flake size, small or fine flake graphite is selling for around US400 a tonne, large flake US$1000 a tonne, jumbo flake US$1400 a tonne and super jumbo flake US$2000 a tonne.
Large flake size and above is a requirement for expandable graphite products including fire resistant building materials and rubber and polymer additives in which thermal conductivity is necessary.
The expandable graphite market is Triton’s principal target for product from Ancuabe, with the fire-resistant materials segment in China, in particular, expected to provide strong growth.
China has mandated that fire-resistant materials must be used in all new building and has banned the use of traditional brominate fire retardants due to toxicity concerns, leaving expandable graphite as one of the only suitable alternatives.
Current annual consumption of expandable graphite in China is 50,000 tonnes, but building industry officials estimate that could increase to as much as two million tonnes a year as the new legislation comes into effect.
Also working in Triton’s favour is the fact that it has shown that Ancuabe can produce a high purity concentrate with 97.5% total graphitic carbon.
For customers, this means that the cost and environmental impact of any further purification will be minimal.
Ancuabe is expected to produce 60,000 tonnes of graphite concentrate a year for an initial period of 27 years.
Triton has secured binding offtake agreements for more than 50% of production with two major Chinese graphite producers, Qingdao Chenyang Graphite and Qingdao Tianshengda Graphite.
In June, major Chinese state owned enterprise Jinan Hi-Tech (JHT) made a $19.5 million investment in Triton that once approved, will result in it assuming a 34 per cent interest in the company.
As part of the strategic partnership now formed, JHT will assist in arranging debt finance for Ancuabe with Chinese banks, with the strong possibility of securing concessional interest rates.
Triton anticipates first production from Ancuabe within 18 months of arranging financing for the project.