The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Studying supply chain that provides more graphite annually to meet rocketing domestic demand for li-ion battery material North of 60 Mining News – January 6, 2023
Results from the 2022 drilling will be incorporated into a new resource estimate that is expected to support higher annual production at the Graphite Creek Mine project in Alaska.
Core from drilling through a Graphite Creek lens.
The Graphite Creek mining area detailed in the 2022 prefeasibility study accounts for only about 7% of the graphite identified with outcrop, drilling, and geophysics.
To better match the world-class size of its Graphite Creek deposit in Alaska to the enormous demand for the graphite going into lithium-ion batteries powering the electric vehicle revolution, Graphite One Inc. is considering a significantly larger advanced graphite materials supply chain in the United States.
Last year, S&P Global Platts forecast that by 2030 it will take 5 million to 6 million metric tons of graphite to meet annual global demand for this carbon material that serves as the anode in lithium-ion batteries.
This would be a roughly fivefold increase over the 1 million metric tons that was mined globally during 2021 to meet the demands of all industrial sectors, according to "Mineral Commodity Summaries 2022," an annual report published by the United States Geological Survey.
For perspective, it would take up to 100 mines of similar size to what is proposed in a 2022 prefeasibility study for Graphite One's advanced graphite materials supply chain to meet the demand forecast for the end of this decade.
For American automakers that must depend on domestic or allied sources of graphite for the EVs they produce to qualify for tax incentives included in the Inflation Reduction Act, the expected growing gap between supply and demand is further complicated by the fact that China accounted for 82% of the world's mined graphite and produced nearly 100% of the battery-grade anode material during 2021.
"North America produced only 1.2% of the world's graphite supply with production in Canada and Mexico," USGS inked in its 2022 minerals report. "Two companies were developing graphite mining projects in the United States – one in Alabama and one in Alaska."
Given the growing demand for domestic graphite and the thick layers of this battery material drilled during its 2022 drill program, the company developing the Alaska project is weighing the option of developing a larger graphite mining operation.
"(O)ur 2022 field program gives us confidence the Graphite Creek Project is truly a generational strategic resource," said Graphite One CEO Anthony Huston.
Graphite One's 2022 PFS envisioned a mine at Graphite Creek that would produce an average of 51,813 metric tons of graphite concentrate per year, which would be shipped to Washington to be upgraded to advanced graphite materials at a processing and recycling facility the company plans to build there.
"Washington State offers the opportunity for Graphite One to use a green energy source – Washington state hydro – to manufacture a green energy material. That's core to our commitment at Graphite One to make our project a model of ESG in action," Huston said.
The Washington plant will upgrade Graphite Creek concentrates, along with purchased graphite material, into 49,600 metric tons of spherical coated graphite that serves as the anode material in lithium-ion batteries and 25,400 metric tons of other advanced graphite products per year.
Graphite Creek, however, hosts 32.5 million metric tons of measured and indicated resources averaging 5.25% (1.7 million metric tons) graphite, plus 254.7 million metric tons of inferred resource averaging 5.11% (13 million metric tons) graphite.
With the completion of the PFS, 22.5 million metric tons of the measured and indicated resources were upgraded to reserves that support 26 years of mining at the production rates outlined in the study. The inferred resources that lie immediately northeast and southwest of these reserves would support more than 250 years of additional mining at the production rates outlined in the PFS.
Upgrading just a fraction of the inferred resources to the measured and indicated categories could provide enough reserves to support significantly larger annual production over a similar or even longer period outlined in the PFS.
While analysis of the 2,090 meters of drilling completed in 2022 is not yet finished, the lenses of graphite are easily recognized in core, and the drilling cut visible graphitic mineralization over wide intervals that are consistent with the drilling carried out in 2021.
"With only about 7% of our 16 km geophysical anomaly incorporated in the PFS, which shows an after-tax NPV of US$1.4 billion, our 2022 field program gives us confidence the Graphite Creek project is truly a generational strategic resource," said Huston. "It is anticipated that the 2022 summer drilling program data will be incorporated in the feasibility study to advance Graphite Creek during this critical time of under supply for U.S. strategic materials such as graphite."
Graphite One's contemplation of a larger advanced graphite materials supply chain comes at a time when the White House and Pentagon have elevated lithium-ion battery materials, including graphite, and rare earth elements, to a select group of critical minerals that are eligible for Defense Production Act Title III funding.
"With this new defense designation under U.S. law, graphite joins a select group of 'super-critical minerals' that are essential to commercial technology and national security applications," said Huston.
In addition to potential DPA funding, Graphite One's proposed advanced graphite materials supply chain would be eligible for tax incentives included in the Inflation Reduction Act.
Under the act, companies that produce lithium-ion battery materials in the U.S. are eligible for a tax credit equal to 10% of the production costs. This credit will be phased out by 25% per year from 2030 to 2032.
The act includes a second tax credit equal to 10% of the costs incurred in relation to the production of 99.9% graphite on American soil and does not have a sunset date.
Graphite One's production is expected to qualify for both credits.
"This action by President Biden validates Graphite One's strategy of creating a full supply chain for advanced graphite materials located in the United States," said Huston.
Stipulations tied to tax credits for EV buyers will likely have automakers looking to Graphite One and other domestic producers of the mined materials needed for lithium-ion batteries.
Starting this year, at least 40% of the materials in the battery of a purchased EV must be produced in the U.S. or a free trade agreement country to be eligible for the tax credits. This domestic materials requirement climbs by 10% per year until 2027, at which point it will remain steady at 80%.
Additionally, EVs with battery components or critical minerals supplied by "foreign entities of concern" will not be eligible for the tax credit starting in 2024 and 2025, respectively.
Considering that China accounted for more than 80% of the graphite mined and 99% of the graphite anode material produced globally during 2021 (facilities outside of China began ramping up production in 2022), automakers are looking for alternative sources.
And at least three are taking a preliminary look at Graphite One's proposed Alaska mine and Washington processing facility.
Graphite Creek concentrate is being used to prepare sample battery anode materials for two major EV manufacturers, and an artificial graphite anode sample is being prepared for a third.
Results from the EV manufacturers' analysis are expected in the first quarter of 2023.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
Reader Comments(0)