As Kingsland Minerals advance on converting a large graphite exploration target into a JORC resource, the major mining companies are beginning to make diverse acquisitions across the battery supply chain.
Following a downturn in the sky-high lithium prices, which had shattered previous highs, the majors have sprung into action and begun what some see as a wave of mergers and acquisitions not seen since the very height of the last mining boom – and they aren’t just coming for lithium.
After early reluctance to jump in on the decade’s biggest growth market for materials, Glencore, Fortescue, Hancock Prospecting, and Rio Tinto are just a few of the names diving headfirst into lithium markets.
And Rio’s cornerstone investment in graphite-focused Sovereign Metals might have indicated a major sweep coming for the rest of the battery chain, with not just immense future growth in mind but a pressing need to secure a diversity of supply away from Chinese dominance.
While there has, like lithium, been a recent downturn in graphite spot prices, the actions of the majors indeed indicate an unabated groundswell of demand.
Australian explorer Kingsland Minerals has made what could be a globally significant graphite discovery in the top end of Australia. As it moves on converting a large exploration target into a rock-solid JORC resource, managing director Richard Maddocks says the market is about more than just a price tag.
“China produces most of the spherical graphite used in car batteries, leading to a lack of diversity in battery production. To address this issue, alternative sources of minerals are being sought out to ensure a more diversified supply chain,” he says.
Kingsland’s February discovery of 20 kilometres of graphitic schists within its Northern Tenement holdings could not have arrived better. It would be an understatement to say Maddocks is upbeat about the market outlook for graphite.
“Things are looking promising, especially considering larger companies and automakers investing in battery mineral projects worldwide,” Maddocks says.
“Now were hoping to identify varying grades for flexibility which would be the icing on the cake for us given that our location and deposit set us apart from competitors – validations of metallurgy and grade will allow us to move forward with even greater confidence.”
Not that Kingsland wouldn’t pick up the phone if Rio gave them a jingle.
“It gives you an alternative to developing it on your own. If larger partners are willing to come in and make a cornerstone investment, it provides a different, maybe easier route to go through to production,” Maddocks notes.
But even outside of supply chain requirements, the long-term story of a battery metal boom remains clear.
“It is all about the upsurge in usage of electric vehicles. So, if you believe the projections on the use of electric vehicles in Europe, Asia, North America, Australia and other parts of the world, there is going to be significant increase in demand for materials to make those vehicles, that is always going to be there, and that is the long-term growth trend,” Maddocks says.
“There has been a short-term fluctuation of prices. But as demand grows, you will see those things getting ironed out, and we will see a price increase over the next five to ten years.
“It doesn’t impact us right now, we’re not producing! It is very early days for Kingsland, and it is interesting to see how the price does vary. Going forward we will aim to future-proof our project against these sorts of things should they occur again.”
China has cracked down on rare earth metal exports of gallium and germanium, but Maddocks says graphite is likely too important for export bans to be considered.
Australia has favourable conditions for large graphite resources, fewer risks and access to skilled individuals. Companies there have higher confidence in ESG credentials and are close to potential source markets in Asia.
Kingsland has an exploration target set for up to 27Mt of graphite at Leliyn, from just a quarter of the 20-kilometre strike length, focusing on quality over quantity. The goal is to become a globally significant graphite project, and the potential scale makes it well-positioned to achieve this.