Syrah Resources announced first production of purified spherical graphite last week from its Vidalia battery anode materials (BAM) plant in Louisiana, USA. Production is based on graphite concentrate mined by the Australian company from its Balama operation in Mozambique. The announcement follows the report of its first unprocessed spherical graphite output in December 2018 and Syrah Resources will now have to ramp up production to a commercial level. Initial plant capacity will be 5ktpy but there have previously been suggestions to take the plant up to 20ktpy. Syrah is focussing on “customer development and strategic partnership opportunities” into 2020.
Syrah Resources has so far supplied most of its flake graphite production from Balama to spherical graphite processors in China, however, it announced a scale back in production from 15kt to 5kt per month from Q4 2019 because of poor market performance and issues with project recoveries and flake size distribution in its concentrate. As with many other flake graphite projects (who, unlike Syrah Resources, have not yet made it to production), the company is now looking at downstream processing to increase its revenues.
Although a number of companies outside of China have managed to produce purified spherical graphite, including both established and potential flake producers, China remains the only country to produce spherical graphite on a large commercial scale. Manufacturing has focussed on China because of its lower production costs and fewer environmental restrictions than those in the rest of the world (ROW). China also dominates the entire lithium-ion battery manufacturing chain, from graphite and anode material production, through to component and final battery manufacture, and China provides the fastest growing market for lithium-ion batteries, mainly from its burgeoning EV sector.
Fewer environmental restrictions have allowed Chinese producers to develop inexpensive processing methods based on the use of strong acids that make it difficult for potential producers in the ROW to compete, even as Chinese production costs rise. Chinese environmental restrictions are tightening and environmental-associated production costs are increasing – for example, from the introduction of China’s environmental protection tax from April 2018 and from the installation of new equipment to meet rising pollution standards. Environmental inspections and plant closures have swept through the graphite industry (and many other industrial mineral industries) since the mid-2010s to make sure producers meet these targets. Spherical graphite processing has been a particular area of focus because of its historically high levels of wastewater and air pollution. Temporary plant closures and price rises have become a recent hallmark of the Chinese natural graphite industry, with more inspections expected to hit in late 2019/early 2020.
Even as Chinese production costs rise, barriers for entry are even higher for spherical graphite in the ROW, with many companies looking to develop alternative production methods that reduce or eliminate the use of acids. Such methods are proprietary but include thermal purification which is very energy intensive and expensive.
The jury is still out on the ability for Syrah and/or other ROW producers to supply spherical graphite on a commercial scale at a competitive cost to Chinese production, or if battery/anode manufacturers will be prepared to pay a premium to have a more sustainable, non-Chinese source of raw material.
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