Madagascan graphite mine poised for global success

Proving its growing strength in the graphite market, Australian industrial mineral concentrate producer Bass Metals – the only graphite producer currently listed on the ASX – last month sold, in advance, 50%, or 3 000 t/y, of flake graphite concentrate from the first stage of its Graphmada mine’s production to European graphite trader Possehl Erzkontor.

Possehl intends to sell the flake graphite concentrate to refractories, foundries and the crucibles sectors in Europe.

“Graphite produced at our Graphmada mine, in Madagascar, offers sector-favoured crystallinity benchmarks that differentiate Bass Metals’ product from those concentrates emerging from a plethora of new sector players who can sell only into the lower- value market sectors, such as battery anode applications, owing to their small to fine flake concentrates,” says Bass Metals CEO Tim McManus.

These benchmarks include flake size, high resistance against oxidisation, a low loss on ignition at 420 ºC, low sulphur content and no carbonates. He adds that the location of the mine is ideal for direct sea-route shipments to major Asian, Sino Japanese and European markets, enabling it to tap into global markets. As an island well off the African coastline and devoid of the tense political scenarios that are suffocating many mineral States of promise on the continent, there is also a sense of market separation for investors, whose interest in the country’s mining is bolstered by its proven history of graphite exports to the north, elaborates McManus.

He explains that the foundries sector is the largest consumer for graphite, adding that current global demand for natural flake graphite accounts for about 50% of the mineral’s total consumption – and also tends to command higher prices. Bass Metals is currently the only ASX-listed company capable of entering all graphite market segments at premium pricing levels, highlights McManus. With a refurbishment programme that is designed to lift concentrate quality and yearly output of graphite concentrate, the miner is ideally positioned to negotiate material contract increases with existing and new customers globally.

“Graphmada has been a traditional supplier to India and the US, and the contract with Possehl will establish a beachhead in Europe.”

This drive to expand its global reach has underpinned Bass Metals’ recommissioning of Graphmada, the first stage of which will be completed by the end of the year. Although the mine had existing mining and export infrastructure, as well as major feedstock ore sources, Bass Metals aims to reposition the project as a longer-term, larger, modern-era, high-grade supplier to global markets through a material capital injection, plant upgrade and new management focus.

A new processing plant has been established on site and significant earthworks and site works have been undertaken. In addition, a new modular drying system, new pumps, electrical systems, power generators, flotation cells and screening and storage-bin infrastructure have been installed, together with several refurbishments across the processing footprint.

A positive cash flow from a Stage 1 production of 6 000 t/y will, further, enable Bass to progress towards its intended Stage 2 expansion to 20 000 t/y during 2018/19, while decreasing costs of production and decreasing capital intensity.

Window of Opportunity
This upgrade will ideally position Bass Metals to supply end- markets, where McManus notes prices for graphite concentrates have improved materially over the past two quarters, owing to weakening supply from China. “Our feedback is that prices will continue to rise over the coming months and supply pressure across larger-flake grades will be reflected in higher prices for +80 and +50 mesh concentrates.

“Limited global supply from China will, moreover, be aggravated by the end of production at a significant large-flake producer in Madagascar. This positions Bass Metals as the only graphite producer in the country and one of the few globally, outside Brazil and China.”

McManus further points out that these supply-side pressures are met by increased demand for larger-mesh concentrates from industrial markets in Brazil, Germany and the US, which all reported strong growth in steel production in early 2017. The market is, thus, seeing the beginnings of a crossover of rising demand and decreasing supply of large-flake graphite concentrates.

“With this window of opportunity, our focus is on attracting ongoing global investment in Madagascar, securing long-term supply contracts and cementing a reputation for supply stability, superior grade and consistency.”

Bass Metals’ due diligence to expand the scope and long-term potential of Madagascar’s mining sector is evident not only in its upgrading of Graphmada but also its ongoing exploration and discovery of nearby graphite deposits with feeder potential. Its acquisition of the Millie Reward hard-rock lithium project will also enable Bass to further build its inventory and stake as an industrial minerals processor on the island.

“Global moves to develop more advanced technology, the resultant demand for long-lasting lithium-ion batteries and the growing use of electric vehicles, presents a key moment for players in the graphite-lithium sector to build a new cornerstone business. Bass Metals is prepared for this through our proven mine and export capabilities, our expanding mine inventory, direct access routes to global markets and having a foot in the graphite and lithium camps,” McManus concludes.