Electronics

Restoring graphite production in Sri Lanka

Ceylon Graphite, a graphite exploration and development company, is working to rapidly increase graphite production in Sri Lanka and re-establish the country’s position in the global graphite supply chain. Innovation platform We spoke to the company’s CEO, Don Baxter, to find out more.

Once one of the world’s leading producers of graphite deposits, Sri Lanka faced dramatic change with the nationalization of the graphite industry in the 1970s and the closure of all the country’s mines by 1979. The industry was privatized again in her early 1990s, and demand for graphite production has increased rapidly in recent decades. Given the growing demand for battery materials amid the global energy transition, it is more important than ever for Sri Lanka to increase graphite production and become a safe player in the world. BATTERY AND ELECTRIC VEHICLE SUPPLY CHAIN (EV).

One organization that has helped facilitate this is seiron graphite, focuses on the exploration and production of graphite in historical resource jurisdictions of Sri Lanka. In a land package comprising 121km2 With a grid containing historic vein graphite deposits, the organization is well positioned to help ensure a stable graphite supply chain. Currently, Ceylon Graphite has four of his exploration sites, some already in development and others soon.

To learn more about the history and development of graphite production in Sri Lanka and the role of Ceylon graphite in facilitating production, visit Innovation platform We spoke with CEO Don Baxter.

Can you give us an overview of the graphite mining and exploration situation in Sri Lanka? How has it developed and why is it so important to increase production now?

The presence of high-grade vein graphite in Sri Lanka has been known since 1675.

Between 1869 and 1918, about 3,000 graphite pits (some mechanized) and mines dotted the southwestern part of the island. His highest production for a year was 33,411 tonnes in 1962.

In 1971, the government nationalized the graphite mining industry, bought out all the large mines, and established the Graphite Corporation in 1972 to manage the large scale mining operations of Boggala, Kahatagaha and Kolongaha.

Learning from its mistakes, the government reprivatized the industry in 1991 and Bogarra Graphite acquired Bogarra’s operations. The following year, the Kahatagaha Mine was acquired by Kahatagaha Graphite Lanka Limited, a government-owned public limited liability company. .

Now that Sri Lanka’s economy has weakened, the government is hungry for more graphite production to profit from taxes, royalties and jobs.

The government has already learned lessons from its past experience and, moreover, has already distributed its fair share of 7% royalties combined with about 30% of the corporate tax, so it is feared that the government will nationalize it again. Is not … We focus on achieving production to provide taxes for the government and jobs for the people, so it will be beneficial for us to grow sooner or later. Given that raw graphite prices are as low as $2,000 per tonne, and even after high government royalties are imposed, it is expected to have a 70% gross margin. Most other graphite mines are not profitable on raw graphite prices.

We have already worked in Sri Lanka for many years and have been able to develop strong relationships with the government and a strong social license. This gives us a head start over our competitors.

What makes Sri Lanka able to produce commercial quantities of vein graphite?

Sri Lanka is able to produce commercial quantities of vein graphite due to its grade and purity. The grade is 90% or higher carbon and can be shipped directly for processing. In other words, there is no need to develop mills or tailings dams. Simply crush and ship the minerals for processing. Therefore, the expected profit margin is high after high taxes and royalties. We have 10 prospective mines, each with the potential to produce 5,000 tons per year with low development capital requirements. With the recent funding close, initially he expects to generate sufficient cash flow from the two mining prospects from which he expects to be able to grow on internally generated cash flow.

However, given that Sri Lanka has over 3,000 historic graphite mining operations, future growth from first-mover advantage could be substantial.

What are the main obstacles to graphite production in Sri Lanka and how are you working to overcome these? Confused?

A major obstacle to graphite production in Sri Lanka is currently perceived country risk. Sri Lanka’s Prime Minister Ranil Wickremesinghe said the country’s economy had “completely collapsed” and was unable to pay for essentials such as oil imports. The country is now working with the International Monetary Fund (IMF) to reach an agreement that will allow the country to focus on increasing exports and stabilizing the economy. We are part of the solution, so we don’t think Sri Lanka’s economic downturn will hurt us.

COVID-19 has affected entire supply chains around the world, but they are no longer frozen, so shipments will only slow down, not stop. The world is getting used to taking a little longer to achieve.

The conflict in Ukraine has increased the cost of input commodities and inflation, but these rising costs have been offset by a weaker exchange rate. In addition, we expect graphite prices to rise, at least to maintain expected gross margins, even if the exchange rate rises more than offsetting the rising costs.

Is Sri Lanka’s mining infrastructure poised to meet the growing demand for graphite used in batteries?

Sri Lanka’s mining industry could benefit from increased demand for processed graphite, but hundreds of thousands of tonnes of graphite production would be required to meet the ever-increasing demand. In addition, the graphite shortage is expected to continue to grow until 2030, making it the largest of any other battery material.

Not only that, but all graphite must be processed into battery grade graphite for use in anodes. Ceylon will be able to grow from free cash flow at the raw graphite price. You can Adding a processing facility can increase the selling price from a raw price of $2,000/ton to a battery-grade graphite price of $10,000/ton. There is an ample supply of industrial graphite, but a growing shortage of engineered graphite. Lithium-ion battery anodeThe world doesn’t need more graphite, but we believe it needs more engineered graphite for batteries.

How important is collaboration in achieving a stable battery supply chain?

Collaboration is critical to achieving a stable battery supply chain. Governments such as the UK need to secure supplies of graphite and other vital commodities, but have limited capacity to do so. . The best financial program for government support in advanced democracies is to provide project loan guarantees to banks. However, benefiting from this support typically requires positive economic research and an offtake agreement from a strategic partner to qualify. Getting to that stage is the hardest part with little support. We’re seeing original equipment manufacturers (OEMs) moving further up the supply chain, and we’re having conversations that didn’t exist a year ago.

What are the main goals for graphite production in Sri Lanka over the next few years? How do Ceylon’s own strategic goals align with this?

Sri Lanka envisions a return to its former glory of becoming the world’s largest supplier of graphite. Ceylon intends to be a catalyst in this regard. Given the current state of the Sri Lankan economy, it will sooner or later become a target. This is in line with Ceylon’s goal of becoming the country’s largest graphite producer.


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Ceylon Graphite Corporation
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