Global graphite resource doubled, claims explorer; Potash sector waits for BHP decision
Well, it’s official (or as official as any resource estimate can be) but an Australian company claims to have more than doubled the world’s known graphite. Syrah Resources (ASX:SYR) says its Balama project in Mozambique contains 117 million tonnes of graphite, while the U.S. Geological Survey in 2012 calculated the world’s known reserves then at a contained 77 million tonnes.
Overall, Balama’s statistics are impressive. In all, the resource stands at 1.5 billion tonnes at a grade of 10.2% total graphitic carbon (along with 0.23% vanadium, or 2.7 million tonnes; to put that in perspective, the USGS shows world production of vanadium last year at just 63,000 tonnes, and total world reserves at 14 million tonnes. It is certainly a critical metal).
One zone, called Mepiche, contains 145 million tonnes at 15.1% total graphitic carbon. Moreover, for the project as a whole, the Balama East portion remains open in all directions, indicating the potential for the overall resource to be increased further. The company has begun further drilling at the Mepiche zone as well as new holes being sunk at the Ativa and Mualia zones.
Syrah’s ambitions are not immodest: it states its aim is for Balama “to be the lowest cost and largest producer of graphite in the world (including China) and to have a very high grade and quality project or the expanding graphite market”.
Meanwhile, on the Eyre Peninsula in the state of South Australia Monax Mining (ASX:MOX) said it will file its maiden JORC resource in late June after 77 drill holes were sunk at the Wilclo project. The company reports the presence of coarse flake graphite. In the same region, Archer Exploration (ASX:AXE) says 42 holes have produced high grade graphite results, the latest assays up to 17.4 total graphitic content.
Abroad, Lamboo Resources (ASX:LMB) says rock chip samples from its Taehwa project in South Korea have return graphite grades up to 27.1%. And in Sri Lanka, Bora Bora Resources (ASX:BBR) has been awarded exploration areas around three existing mines.
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Sri Lanka, then Ceylon, was the world’s leading producer of graphite in various years through the early 1900s. There are two major mines in operation, the government-owned Kolongaha and the German-owned Bogala mine. In addition, two old mines have recently been re-commissioned, Sakura and Queens. Germany is thought to be a significant customer for their output.
POTASH: According to Reuters, Russia’s Uralkali OAO will rein in its expansion plans if BHP Billiton goes ahead with its Jansen project in Saskatchewan. The agency quoted chief executive Vladislav Baumgertner said “we will postpone the realization of Solikamsk-3 expansion and Polovodovsky by five to 10 years” if the British-Australian giants proceeds.
The $1 billion Solikamsk-3 mine expansion would add 2 million tonnes of annual capacity, and the new Polovodovsky mine would cost an estimated $2.4 billion to build and increase Uralkali’s capacity by a further 2.5 million tonnes. But here is the telling fact: Reuters adds that “Uralkali has not yet completed feasibility studies on the projects“. That probably means at least two years for those to be completed; in other words, these are not “shovel-ready” projects so one has to conclude this is not quite the immediate threat that the headline suggests.
What Urakali’s going public on thus does help to make clear is what an impact BHP will make whichever way it jumps. If it rules out proceeding with Jansen, then we are likely to see others leap in; Mosaic has already indicated it would reconsider a decision to shelve its Canadian potash expansion if BHP scuttles Jansen. If that were the case, then Uralkali will no doubt hit the green button for the above projects and, as Reuters reminds us, the Russian company added 1.5 million tonnes capacity last year at Berezniki-4. It also is planning a 2.8 million tonnes a year mine called Ust-Yayvinsky.
So it all hangs on BHP, it seems. It reminds you of that famous 1953 play Waiting for Godot in which two characters on stage get involved in all sorts of absurd activities while they wait for the eponymous character to appear, doing anything “to hold the terrible silence at bay”. Now we have “Waiting for BHP” and we have characters similarly filling the silence from Melbourne. Godot never does appear, but I think we will hear from BHP one way or the other.
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