EDITOR: | October 17th, 2013 | 29 Comments

What every investor needs to know about investing in graphite

| October 17, 2013 | 29 Comments
image_pdfimage_print

sgsartSGS Canada Inc. provides independent services that, literally, touch the lives of millions of people (and investors) across the globe. SGS provides industry-leading inspection, verification, testing, and certification services — anywhere in the world — on the most-advanced projects. Exploration companies (and many of the advanced graphite projects in the world) utilize SGS’ services to operate in a more sustainable manner by improving quality and productivity, reducing risk, verifying compliance and increasing speed to market. With a reputation for passion, integrity, entrepreneurship, and innovation, SGS is the company exploration companies turn to when compiling and delivering essential information. In other words, they turn to SGS when they need to be sure.

Based in Geneva, Switzerland, the company has 75,000 employees and operates over 1,500 offices and laboratories worldwide. In short, SGS is the Rolls Royce of inspection, verification, testing, and certification.

In keeping with my quest to know all that one man can (or should) possibly know about graphite, I wanted to speak to the man whose name I see frequently at the bottom of numerous new releases announced by various junior graphite explorers touting 96% to greater than 99.9% graphitic carbon purity — Mr. Oliver Peters, M.Sc., P.Eng, MBA, — SGS Canada’s Consulting Metallurgist and President of Metpro Management Inc. Mr. Peters has extensive experience in the development of metallurgical processes and has personally managed the majority of the graphite testing programs conducted at SGS in recent years.

Ty Dinwoodie (TD): I understand that you specialize in graphite?

Oliver Peters (OP): That’s one of the areas, yes, but I also have been involved with many other commodities such as copper, nickel, platinum group metals, lead, zinc, diamonds, gold, and silver — just to name a few.

TD: You test graphite samples submitted to SGS?

OP: Essentially, I manage the process development for new mine prospects. The scope of work of the programs generally includes the development of a metallurgical process to recover the valuable minerals into a high-grade flotation concentrate. In the case of graphite that generally means producing a concentrate grading greater than 95% carbon. The concentrate would then be subjected to further characterization work to determine its marketability. But if the client targets battery grade, then the graphite flotation concentrate has to upgraded in a chemical or electro-thermal purification process.

TD: Do you base your process ultimately on what the client is targeting for its graphite’s end use?

OP: Well obviously the battery application — ultra high-purity graphite — is the hot topic these days, so generally most clients are proceeding with some purification testing to determine the maximum grades that can be achieved for their graphite. But whether or not the commercial plant will include a purification circuit, that’s a different question. At 95% to 96%, sometimes even up to 98% flotation concentrate grade the product can be readily sold without the need to purify the graphite further.

TD: So you don’t have to keep trying to optimize it to get to the 99.9%?

OP: The revenue from the ultra-pure concentrate is substantially higher compared to a 95% to 97% carbon flotation concentrate, but it’s also associated with much higher processing costs. At the end of the day, it comes down to economics. In order to develop the process with the highest NPV, all options need to be explored, including purification tests to battery grade. However, depending on the specific deposit, this may not be the most economic approach.

TD: In your experience, what is a high percentage of purity achieved when just using conventional flotation?

OP: Around the 97% to 98% carbon range — and that’s mostly for the coarser flakes. If you look at some of the press releases from some of the more advanced projects, they have also very good results for the fine flakes — so it really depends on the graphite and how it upgrades in the process. As a general rule, the coarser flakes upgrade quite easily to 96% carbon and in some cases even up to 98% C. Maximizing the flotation concentrate grade while minimizing flake breakage is the key challenge in the process development programs.

TD: But to achieve 99.9% or, in some cases,  greater than 99.99% requires a more sophisticated chemical process?

OP: Yes, because impurities are attached to the surfaces and in the crevasses of the flakes that cannot be removed with a mechanical process such as grinding and flotation.

TD: The conventional flotation process is more mechanical?

OP: Yes. It is based on liberating valuable and waste minerals in crushing and grinding stages followed by separating the two streams with the aid of reagents and air.

TD: What would you call the process that requires chemicals or acids to achieve high purity, greater than 99%?

OP: This approach is referred to as a hydrometallurgical process. Two common routes are a hydrofluoric (HF) leach process or a caustic bake. In addition, a graphite flotation concentrate can also be upgraded through electro-thermal purification. So there are different routes.

TD: So there are two routes to pursue when a graphite company is attempting to achieve ultra high purity?

OP: There are two main processing routes — chemical and electro-thermal purification. I’ve mentioned two chemical purification methods before, but there are other options and with the revived focus on graphite in recent years. More process development in the hydrometallurgical field is currently being conducted.

TD: Do all two high-purity paths that can be pursued all involve acid?

OP: Not the electro-thermal. Electro-thermal purification exposes graphite materials to temperatures up to 3,000°C to remove any impurities.

TD:  Is the electro-thermal process a more expensive path? Meaning is it something that would be less likely to be commercially viable on a larger scale?

OP: Well, for example, one of the North-American major off-takers for graphite employs electro-thermal purification on a commercial scale — so it is definitely viable. The more economically attractive route will depend on many factors such as the location of the deposit, on the flake-size distribution, the amenability of the flakes to purification, and the maximums grade that can be achieved with flotation only. Both purification routes are not cheap and that’s why flotation is essential to upgrade the ore from 2% to 25% carbon head grade to the maximum grade that you can achieve before introducing the chemical or electro-thermal purification. Every impurity that has to be removed by the purification process is going to cost substantially more money compared to flotation.

TD: Most companies would want to go for the cost effectiveness of flotation?

OP: You will have to as a first upgrading stage. Although you can technically leach ore at 10% or even 2% graphitic carbon, the project CAPEX and OPEX will render it economically unfeasible.

TD: How old is this technology?

OP: The purification methods were developed in the last few decades and are still being refined and optimized. The basic flotation process employed to upgrade the graphite ore is over 100 years old. It’s as old as mining really.

TD: This isn’t late-breaking technology, so to speak.

OP: Flotation certainly isn’t. The trick is in the development of the process flowsheet and in that sense each ore is different. There are so many different variables in the development of a flowsheet, so you can’t just subject a new ore to an existing flowsheet. It might work, but the process will not be optimized; you’re likely going to destroy larger flakes and/or yield lower concentrate grades compared to an optimized process. Each graphite deposit is different and the process has to be tailored to that specific ore.

TD: The issue isn’t just to achieve ultra high purity; it’s to get the graphite to the highest purity in the most cost-effective, viable way?

OP: Absolutely.

TD: One can achieve 99% graphite purity if one willing to spend lots of money and use more acid?

OP: Yes, for most flake graphite deposits as long as the impurities are attached to the mineral surface rather than embedded in the mineral matrix. However, it again comes down to economics, as it’s easier to upgrade the ore to high-purity concentrate for some deposits than it is for others.

TD: So any type of natural flake graphite can be made into ultra high purity, but if it’s not a reasonable grade to begin with, it’s very expensive to do.

OP: Correct, at least based on my current experience with over a dozen graphite projects.  However, there is no standard definition for “ultra high purity”. The concentration and type of impurities will differ between different deposits and a purified graphite concentrate from one deposit may be suitable for a specific ultra high-purity application, while another is not. But it is still an expensive process and the hydrofluoric acid route has a significant health & safety and environmental concern. That’s why the caustic bake is, at least from a health and safety point of view, less problematic.

TD: Caustic bake sounds like the most advantageous and cost effective of the three methods for achieving ultra high purity, is that correct?

OP: Well, it’s one route. You would not likely go with hydrofluoric in a commercial process if you can avoid it. Electro-thermal purification is carried out on a commercial scale – so that’s certainly an option too. It essentially comes down to how the graphite behaves and economics.

TD: Is there a reason why a graphite company — that has pretty potent graphite coming out of the ground — wouldn’t use caustic bake over the thermal process. Could that be more cost effectiveness or just a preference of the engineer?

OP: If the company is planning on carrying out the purification themselves in the commercial process, the chemical purification route may be easier to implement. Also, there are a number of off-takers of graphite concentrate that carry out the purification process in house, i.e. they would be interested in purchasing a flotation concentrate only with the highest grade possible to minimize the cost of their purification process.

TD: The simple caustic bake is not inherently expensive or unusual. Is that what you would normally be doing with any company that gives you conventional flake graphite when you’re trying to achieve ultra high purity?

OP: That’s why it is commonly employed as first pass — it is just a simple test with a set number of process variables. However, in order to determine the CAPEX and OPEX of your circuit, these process variables will have to be optimized as you don’t get sufficient information from a single test. It’s certainly not a cheap process, but can it be economic? Absolutely, although it’s obviously also affected by the market price for a purified product. In order to obtain the very high-grade concentrate grades, one of the purification approaches will have to be taken. That’s why battery grade graphite has a premium price over any other type of graphite — because there is additional processing involved and the processing costs are substantial. Flotation is definitely much cheaper in that regard and gives an indication of how well the graphite upgrades.

TD: What are the steps taken when a graphite sample is presented to SGS for testing?

OP: First you have to produce a flotation concentrate, which you would then subject to the purification process. You would not take the run of mine ore and subject that to a caustic bake (although it’s technically feasible it does not make economic sense). So the first step is to develop at least a conceptual flowsheet to generate a flotation concentrate. The exploratory purification test then only uses a few grams of this flotation concentrate. In the purification process reagent addition rates and process conditions are chosen conservatively to make sure that as many impurities as possible will be removed. So it’s not optimized, but at least you know how well the flakes will upgrade.

TD: And is that a good indication of purity — or is it just too preliminary?

OP: Well, it’s a valid result. Can you further increase those numbers? Possibly. Can you optimize the process from a reagent consumption point of view? Absolutely. With any project development you start with some preliminary tests and if those are encouraging you start refining your process more and more. Obviously you wouldn’t carry out the full program before you have some indication that the ore is behaving reasonably well, because you wouldn’t want to spend hundreds of thousands of dollars on process development if the ore is not yielding promising results. That’s why it is a multi-stage process where you first carry out initial scoping level testing. If the test results are encouraging, the next phase would be some process optimization and that continues on all the way through to a pilot plant scale and generation of process design criteria for engineering and CAPEX and OPEX estimates.

TD: When a graphite company is pursuing ultra high purity or battery-grade graphite, it would go to a third party like SGS, which I understand is a world leader in this field.

OP: Yes, because many of the companies all around the world — especially the ones with projects that are fairly well advanced – use the services of SGS due to the level of expertise that was obtained over the past 3 years. I was leading the development of the process flowsheet for a number of the more advanced graphite exploration companies such as Northern Graphite, Focus Graphite, Mason Graphite, and Energizer Resources. Zenyatta also awarded SGS in Lakefield the process development for their graphite deposit and numerous other graphite exploration companies are using the analytical and metallurgical services provided by SGS in Lakefield.

TD: So SGS does everything from initial purity trials to pilot plant testing?

OP: Yes, SGS does carry out all of the tests from the exploratory level lab scale to the pilot plant scale. The flowsheet development and subsequent pilot plant testing are all done at the same site. The analytical and mineralogical services are located on the same site as well, which helps to streamline the entire development process. The advantage of having all groups on the same site is that they can easily communicate with each other and, as importantly, have access to the same data.


InvestorIntel

Editor:

InvestorIntel is a trusted source of reliable information at the forefront of emerging markets that brings investment opportunities to discerning investors.


Copyright © 2016 InvestorIntel Corp. All rights reserved. More & Disclaimer »


Comments

  • hackenzac

    Northern Graphite’s purification process, neither caustic bake nor thermal or maybe it’s a hybrid, they not exactly saying.
    http://finance.yahoo.com/news/northern-graphite-develops-proprietary-purification-124500088.html

    October 17, 2013 - 3:10 PM

  • Jim S.

    I enjoyed this article Ty. Found it very informative, basically a primer in graphite investing. I have forwarded out to a friend who was asking about Graphite and how to know a good project just last week. Keep the information coming.

    October 17, 2013 - 4:01 PM

  • Dr. Copper

    Great article Ty, thank you ever so much, tremendous work.

    Archer Exploration is the only graphite explorer I’ve noticed whom
    has come out with 99 pct TGC purity from conventional floatations
    without hydrometallurgical processes. Archer’s deposit is a highly-
    and deeply weathered zone from surface.

    It is what this article says all about purity, how to get it produced
    in a consistent way to specific requirements.

    Basically the higher the purity the shorter the upgrading route end
    user would require.

    Mason Graphite has some good videos on their website which
    explains that graphite is about powders and purity.

    October 17, 2013 - 6:11 PM

    • Ty Dinwoodie

      Thank you, Doctor. Your kinds words are much appreciated. Oliver Peters is a fantastic person to interview. I really enjoyed it and learned a lot.

      Admittedly, I am not that familiar with Archer Exploration (or the Australian graphite plays, to be completely honest). In the coming weeks, I want to study: Archer, Lamboo and Monax, as those are the juniors that completed their respective JORC resource estimates. Australian-based Syrah and Talga are advancing, but in other countries. But thank you for reminding me to being myself up to speed on the graphite ‘happenings’ in your part of the world.

      October 20, 2013 - 11:31 AM

      • Dr. Copper

        yes, some of them will become producers, others
        not. You may find it hard to get solar panels out to
        Lamboo’s initial sumps but I am sure you will soon get the hang of it.
        Lincoln Minerals should be on your list too.

        October 22, 2013 - 8:59 PM

  • Dr. Graphitee

    You do realize that the first 3 operators of that Northern Graphite deposit when bankrupt trying to put it in production right?? You should really stick to copper as graphite really is not your thing…you just keep proving to everyone how clueless you are!

    ZEN.v on the other hand had a big hammer on the weekly which bodes very well for the next few weeks. With all the news on deck, ZENYATTA could be explosive!!

    October 18, 2013 - 4:25 PM

    • Dr. Copper

      WOW, thank you for sharing your graphite knowledge
      and belittlement like no one else except you know
      who.

      Maybe Northern Graphite is just smarter than the
      average Australian, you see, with a proven
      resource, the optimization technic comes in focus
      alot easiers than having to employ ramping teams
      across multiple websites.

      Perhaps you need to read Ty’s article again.

      Frankly, take your sharetrading technics up the creek,
      the Syrah candle is already blown out on the missing
      Uranium assay results.

      October 18, 2013 - 6:21 PM

  • Mymoolah1

    Hi Dr. Graphite,

    Have you had a good look at Energizer Resources (EGZ)? They trade on the TSX.

    They have their graphite at surface. SGS also has assessed their graphite and they have produced 99,9% graphite with simple crushing and flotation and no added chemical processes.

    I do not profess to have anywhere near the knowledge that you and Dr Copper have on graphite, but believe the EGZ has massive blue sky potential. They have a small market cap, are near to Asian markets, have a lot of large flake with high purity and should be a very low cost producer. Their initial PEA gave them an IRR of 48% ( and this was before SGS released their improved numbers).

    I would appreciate your perspective on this company.

    TIA

    Mymoolah1

    October 18, 2013 - 8:41 PM

    • Tracy Weslosky

      We are working hard to get the Energizer team on board at InvestorIntel.

      October 23, 2013 - 10:41 AM

  • Bill

    There is no mention of FMS – Focus Graphite. Why”

    October 19, 2013 - 2:57 PM

    • Ty Dinwoodie

      Actually, in the second-to-last question I asked him, Oliver mentioned Northern Graphite, Focus Graphite, Mason Graphite, Energizer Resources, and Zenyatta Ventures.

      This interview was intended to discuss graphite processing, so that investors would be able to better understand some of the methods utilized to achieve >99% ultra-high-purity graphitic carbon.

      October 19, 2013 - 5:37 PM

  • InvestorIntel Week-in-Review: Welcome David Morgan, Tasman up +30.72% & IC Potash's CEO on the future of potash pricing | InvestorIntel

    […] interview with SGS Canada’s Consulting Metallurgist and top graphite expert, Oliver Peters for: What every investor needs to know about investing in graphite. It’s a very thorough lesson in understanding graphite purity and how >99% graphitic purity is […]

    October 22, 2013 - 11:57 AM

  • black jack

    lots of names and numbers however what has happened to SER on the ASX
    quietly flying under the radar me thinks

    October 23, 2013 - 11:52 PM

  • black jack

    SER:ASX report Study Results
    The project economics for Uley have again been shown to be favourable and it has been recommended
    that the project should advance to production subject to further plant design.
    The engineering study considered the capital and operating costs for a 50,000 tpa plant with the following
    conclusions –

    Potential future operating costs have been reduced significantly with improved efficiency in plant
    design which adds to the favourable economics of the project. Production costs are expected to
    be under $300 per tonne.

    The average graphite price over the full range of products to be produced is expected to be
    A$1,337, based on marketing study by Tech Minerals Consulting Group.

    Process plant capital expenditure for 50,000 tpa capacity is expected to be circa $33 million.

    Indicative EBITDA at full production in excess of A$45 million per annum using the graphite price
    as supplied by our marketing specialist @ US$1.0425 conversion and the operating costs as
    indicated above.

    No significant infrastructure or environmental permitting constraints were identified.
    According to the report the mine life is approximately 9 to 10 years under the current Resource
    Statement, of which just over six years is accounted for by Indicated Resources and the balance Inferred
    resources. See table below for key production variables.

    October 24, 2013 - 12:15 AM

  • Stephan B. Feibish

    The article was much appreciated. Please more like this one.

    October 26, 2013 - 6:26 PM

  • InvestorIntel Week-in-Review: Berkwood (+33.33%), Hastings Rare Metals (+26.83%), Texas Rare Earth (+24.38%), & Canada Rare Earth (+14.29%) | InvestorIntel

    […] with SGS Canada’s Consulting Metallurgist and top graphite expert, Oliver Peters for: ‘What every investor needs to know about investing in graphite.’ It’s a very thorough lesson in understanding graphite purity and how >99% graphitic purity […]

    October 28, 2013 - 11:28 AM

  • brodeur

    any thoughts on the new Miller properties where Canada Carbon and Cariboo are providing updates on hydrothermal veins? CCB mentioned they have nuclear grade graphite and is apparent on the surface, ready to be sold. Waiting for permit.

    November 4, 2013 - 12:36 AM

  • First Metallurgical Results Released; Nouveau Monde Mining represents the new generation of Graphite Explorers | InvestorIntel

    […] metallurgical results from its Matawinie graphite property. The study, performed by industry expert Oliver Peters at SGS Canada in Lakefield, Ontario, assessed the metallurgy of Nouveau Monde’s graphite ore to industry-standard crushing, grinding […]

    November 7, 2013 - 10:49 AM

  • Offtake agreement announced; Focus Graphite makes history | InvestorIntel

    […] graphite, the larger the flake size and the higher the purity, the more the graphite is worth. And in the graphite business, grade, quality and costs (with the emphasis on costs) are critical […]

    December 20, 2013 - 10:47 AM

  • Focus Graphite — it's all about the numbers | InvestorIntel

    […] graphite, the larger the flake size and the higher the purity, the more the graphite is worth. And in the graphite business, grade, quality and costs (with the emphasis on costs) are critical […]

    February 6, 2014 - 2:34 PM

  • Tom

    Ty, great article – I hope to see more from you in the future. Can you please speak to the Hummer purification method that Lomiko uses as this method pertains to relative graphite purification cost. Thanks

    July 15, 2014 - 11:33 PM

  • Tim Ainsworth

    Thnx Ty, a lot of practical detail there, the ease & ability to take material downstream will most likely sort the winner & losers and you’ve created a very good outline of the metrics.

    When taking a glance Downunder keep an eye out for Valence’s metallurgy results, second JORC for the Uley2 extension and Feasibility Study, all due by 20th Dec. Perhaps the overdue operating permit for both Ph1 & Ph2 might pop up too.

    In the 1990’s Uley1 was producing 94% – 97% ROM with basic wash & float and achieving 98% with a second flotation stage. As that pit missed the main resource it will be interesting to see what results can be achieved at Uley2.

    Further detail re the 60%+ grades and up to +5 Mesh “Arterial Flake” from a previously unknown pegmatite zone should also be included.

    December 11, 2014 - 10:41 AM

  • BTc

    Hie. Dr Graphite
    That is a remarkable contribution you just did. You have just answered many especially those in the metallurgical field like me, with anticipations to invest into graphite processing.

    August 8, 2015 - 8:31 AM

Leave a Reply

Your email address will not be published. Required fields are marked *