Graphite projects outside China face long road

Developers in Canada, Africa and Australia are advancing a new wave of graphite projects aimed at supplying the battery sector even as prices and long development timelines test the economics of building supply chains outside China.

Northern Graphite’s (TSXV: NGC; US-OTC: NRTGF) Lac des Iles mine in Quebec, Syrah Resources’ (ASX: SYR; US-OTC: SYAAF) Balama operation in Mozambique; and Renascor Resources’ (ASX: RNU) Siviour project in South Australia are pushing for their share of the battery metal market.

China accounts for roughly three-quarters of global natural graphite production and controls an estimated 85% to 90% of downstream battery-grade graphite processing, according to data from the U.S. Energy Information Administration. Graphite typically makes up about 15% to 25% of a lithium-ion battery’s weight, giving supply shortages an outsized impact on electric vehicle and energy storage supply chains.

Benchmark Mineral Intelligence analysis shows global flake graphite demand, which measures consumption of naturally mined graphite used in batteries and industrial applications, is expected to rise sharply through 2035, driven primarily by battery applications, with the market projected to enter deficit by the mid-2030s.

Growth drivers

EVs are expected to remain the primary driver of demand growth, followed by stationary energy storage systems, Tracy Hu, a natural graphite analyst at Benchmark said.

“As the market tries to diversify away from the China supply chain, we expect ex-China flake graphite supply to represent a larger share over the long term,” Hu told The Northern Miner by email. “But it’s also worth noting that a substantial majority of announced projects outside of China remain in early stages – we expect these assets won’t come online within the next few years unless they make progress towards securing permits, construction and commission.”

Long timelines

The gap between rising battery demand and new graphite supply is forcing developers to focus less on demand forecasts and more on execution risk.

For companies further along the development curve, that has meant prioritizing mine output, downstream processing and customer qualification. Northern Graphite, which operates Canada’s only producing natural graphite mine, is among the few developers with existing production capacity outside China.  

The company also holds the past-producing Okanjande project in Namibia, which hosts 1.6 million tonnes of measured and indicated graphite resources, and the Bissett Creek project in Ontario, where the company hopes to secure financing to start production this year. But the strategic emphasis at the moment is its producing mines.  

“If you want to be competitive in this space, you have to be in production,” CEO Hugues Jacquemin says. “You can’t compress the timelines.”

Regionalized approach

Northern Graphite has moved to develop its own downstream capabilities, including battery-material processing, product qualification and customer testing, in an effort to shorten the path from concentrate to anode material. In 2024, the company established a battery materials development team in Germany.  

The company is advancing plans for a $200-million (C$272-million) battery anode materials plant in Yanbu, Saudi Arabia. It is to be through a joint venture with Obeikan Investment Group, which will hold 51% while Northern Graphite holds 49%. The proposed processing plant is targeting initial production of 25,000 tonnes per year by 2028 using feedstock from its Okanjande mine.

“We want to have a processing site in each region of the world,” Jacquemin told The Northern Miner. “One in North America, one in Europe, and one in the Middle East.”

Progress in Europe and North America has been slowed by weaker-than-expected battery demand and an uneven customer pipeline and less by geology, the CEO said. Geopolitical uncertainty has tempered growth projections across the sector.  

With Chinese producers continuing to exert pricing pressure, he said competing outside China remains difficult without a structurally low-cost operating base – a position the company believes it can achieve in Saudi Arabia.  

“To reach the same cost position in Europe or North America, something has to give,” Jacquemin said. “Either we get a higher price or we get some help on the cost side.”

Early-stage development

Further back on the development curve, some juniors are facing not only financing hurdles but organized local resistance.

Lomiko Metals (TSXV: LMR; US-OTC: LMRMF) is preparing a pre-feasibility study and testing bulk sample material at its La Loutre graphite project in Quebec, about 30 km southwest of Mont-Tremblant.

But locals in the area favoured for skiing and holiday homes aren’t thrilled at the prospect of one of the largest graphite deposits in the world being tapped for 108,000 tonnes of concentrate a year.  

Mayor David Pharand in the nearby municipality of Duhamel said the project lacks community support, citing a vote last year with 95% against it.

“Lomiko has been a poor corporate citizen, and the project is not situated in a good place for development,” Pharand told The Northern Miner in February.

However, CEO Gordana Slepcev said access to capital remains the main constraint for the $236-million in capital spending cited in a 2021 study.  

“It really costs a lot of money to move these projects toward production and [complete] the studies,” Slepcev said in an interview.  

La Loutre holds 68.3 million indicated tonnes grading 4.08% graphitic carbon for 3.1 million tonnes graphite in situ and 12.7 million inferred tonnes grading 4.11% graphitic carbon containing 800,000 tonnes of in situ graphite, according to a 2024 resource update.

China’s dominance reflects years of heavy investment and government support that have kept prices artificially low, making it difficult for new producers to compete, the Lomiko CEO said.  

Without comparable investment in Western supply chains – including downstream processing and battery manufacturing – she warned that alternative sources will remain vulnerable to future price increases and supply constraints.

“It’s up to government to really accelerate this…to make it attractive for private capital,” Slepcev said. “We need billions to build this industry.”