Madagascar is now the fifth largest graphite manufacturer in the world
Madagascar may be best known for talking zoo animals, a monarchy comprised of lemurs, sassy hippos, and flamboyant musical numbers, but the African island just east of Mozambique has a commodity more pressing and vital than dancing primates.
Madagascar may be best known for talking zoo animals, a monarchy comprised of lemurs, sassy hippos, and flamboyant musical numbers, but the African island just east of Mozambique has a commodity more pressing and vital than dancing primates.
In an astounding movement up the ladder of production, Madagascar has come in as the fifth largest graphite manufacturer in the world, producing 19% of total graphite output in 2019 to date, against production outputs of 11% in 2018.
This places Madagascar above first world mega-economies such as the UK, Germany and Japan.
Despite the fact that US graphite imports overall decreased 0.52 percent through the first six months of 2019, their imports from Madagascar increased $1.58 million (a 254.22 percent for the nation compared with 2018 levels), comprising a total of 7.02 percent of all shipments thus far in 2019, according to WorldCity analysis of the latest U.S. Census Bureau data.
The stats don’t lie, and all signs are pointing to Madagascar continuing to move up this ladder of production – so let’s understand why, and how, this has happened.
Firstly, Madagascar offers favourable pricing and have generally provided a high quality product.
When graphite is in high enough concentration, it is crushed to a particle size and processed in a way that essentially removes any deleterious material (waste) graphite. This value product is known as ‘flake graphite’, and is hot property for the electric vehicle industry, as well as storage batteries, fire retardants and furnace equipment / lining.
Madagascar has a competitive edge with their large flake sizes, which are scarce and in high demand.
Unlike other types of graphite, the type often mined in the Madagascan region is expandable when treated with acid and high temperature, which is important for it to be marketable. Larger flakes tend to expand to a larger extent than fine material and as a result, coarser flakes can bring in a price premium.
Many other producers, such as China may have a large output but mostly mine the finer flakes, which is why the jumbo flakes significantly bolsters Madagascar’s international profile in the graphite market.
Capitalising off of? Madagascar’s unique and incredibly profitable graphite reserves is Australian mineral exploitation company BlackEarth Minerals (ASX: BEM), who have identified growing trends in graphite demand, and targeted assets around the world rich in these specific types of high-value graphite.
BEM’s flagship project is located in Maniry, a small regional township located in Southern Madagascar that, upon a thorough analysis across a spectrum of strict criteria, BEM found to be a prime host of a large-scale graphite mineralised system. Last year, BEM released an impressive report on their flagship Maniry deposit in Madagascar, confirming the presence of high-purity, ‘jumbo’ flake sized graphite at the project – potentially capable of attracting premium prices for use in lithium ion batteries. All flakes were also found to be free of any internal contaminants, confirming the high-quality nature of the graphite.
Graphite is the most important raw material in lithium-ion battery. China sits on 60% of global graphite production, but at a lower quality than Madagascar.
Graphite demand rose an enormous 25% from December 2016-17, with the overall global levels of demand for graphite set to soar by as much as 200% by 2020. As the world turns to batteries, mining operations will have to expand to meet demand; currently the biggest graphite mine in North America produces just 25,000 tonnes annually.
“The order of graphite needed in these megafactories is in the millions of tonnes. At the moment, the anode space is about 165,000 tonnes per year but you’re going to need well over 1.6 million tonnes per year by 2030 if all these plans come on stream.”
Whether you’re in the market for a performing lemur, or looking to profit upon Maniry’s sublime graphite opportunities, it would appear indisputably true that Madagascar is primed to take off as a key player in the global race for sustainability.
BlackEarth Minerals trades under the ASX code: ‘BEM’
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*Reach Markets are paid a retainer to assist BEM with private investor management.
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