In December 2019, Magnis Energy Technologies (Magnis) signed a binding contract with Metallurgical Corporation of China (MCC) for engineering, procurement and construction (EPC). The contract is described as a ‘fixed price turn-key solution to produce high-purity graphite products’ and covers building of the processing plant as well as related infrastructure including roads, power, workers camps and storage facilities totalling US$277M. The EPC contract is a prerequisite in Magnis’ application for project financing support from China Export Credit Agency.
Magnis is an Australian company which is developing the Nachu project in the south east of Tanzania for flake graphite. It completed a bankable feasibility study for the project in March 2016 and plans a production capacity of 240ktpy graphite concentrate. The company is also developing three lithium-ion battery manufacturing plants in Australia, the USA and Germany.
Africa, and Tanzania in particular, has been a focus for flake graphite exploration in recent years with several projects in various stages of development. Progress faltered during the country’s political upheaval, with all new mining licences suspended in July 2017 until a new mining commission was put in place and the Tanzanian government introducing a new fiscal and regulatory regime that year. The first new mining licences were released in Q2 2018 and graphite project development began again in earnest through 2019. In addition to Magnis, companies looking to produce natural graphite in Tanzania include Armadale Capital, Black Rock Mining, Graphex Mining, Kibaran Resources, Volt Resources and Walkabout Resources.
Growth in demand for graphite from China’s lithium-ion battery sector, combined with declining reserves, rising production costs and the constant threat of closures for Chinese graphite producers, is fuelling a shift in the Chinese market towards much greater quantities of graphite imports. Africa, with its large graphite resources, strategic location and established investment links with China, is an attractive prospect for potential Chinese customers and investors.
Much of China’s recent imports for the battery sector have come from Mozambique but with the roll back in production from the major new Mozambican producer Syrah Resources, it seems likely that Chinese consumers will be looking elsewhere, even as Syrah’s poor performance has led to a muted appetite for further graphite investment in the ROW.
Roskill’s NEW Natural & Synthetic Graphite: Outlook to 2028 report was published in July 2019 and the next update will be available for subscribers in January. Click here to download the brochure and sample pages or to access further information.