Resource World Magazine

MINI NG GRAPHITE A CRITICAL COMMODITY FOR GREEN TECHNOLOGIES by Vanessa MacLean B oth the European Union and the United States have declared graphite a supply-critical mineral. The alarm, as of late, has spun off the realization that China, the greatest exporter of graphite, seems to be closing up shop. No new mines were built in the country during the last economic cycle, and in fact, the heavy protectionist acts in the country are actually going to ensure that graphite mines are much more difficult to build and operate in the future. The Chinese government is merging many of its graphite mines for environmental reasons, and tightening control on production as it has done for the tungsten and molybdenum markets. Furthermore they have been proactive in encouraging value-adding processing through issuing an exportation tax and licensing system. The effects of this deliberate shut down were felt in 2012 when exports of flake graphite dropped by approximately 24%. This has left many wondering. If future graphite supply won't be coming from China, then where will it be coming from? India is the second-largest producer followed by Brazil, North Korea, Canada and Romania, with the largest reserves, accord32 www.resourceworld.com ing to the USGS, in China and India, which combine to total 86% of the global 77 million tonnes of reserves. However, the third largest holder of graphite ground reserves is Mexico, leaving many to speculate that the country may become the ringer in the graphite market this upcoming decade. Mexico's reserves are estimated at 3.1 million tonnes, nine times higher than Brazil – the world's third-largest producer. However, with very little production, Mexico flies under the radar. Mexico was once a major producer, and in the 80s it was the second largest producing nation on the planet. But, by 2000, production began to drop. Decline was attributed to the type of Mexican graphite – amorphous, which is a less-pure form, as well as the deposit type (large horizontal beds which required expensive underground mining methods). Mexican graphite may experience a turnaround though, as the price for amorphous graphite has made a substantial recovery from approximately $150/ton in 2007 to $299/ton in 2011. This value increase may spark interest in exploration and mining in the country. Big North Graphite [NRT-TSXV] for example, has acquired three past-producing mines in Sonora, Mexico with the hopes of capitalizing on this recovery. Sri Lanka could also play a role in the future market. The country is now beginning to open its mining sector to foreign investment, since the civil war with Tamil separatists ended in 2009. Sri Lanka currently produces a very small amount of graphite, but is actually unique in that their graphite is in the lump and chip form, the most valuable type, currently costing $1,990 per MT. The Sri Lankan government has created many enticements for foreign businesses including rapidly developing infrastructure, port facilities, a new airport, as well as tax incentives. Sri Lanka also has significant exploration potential. With the abundant political challenges the country faced over the last few decades, sparse modern day exploration techniques have been utilized. Companies such as Bora Bora Resources [BBR-ASX] and Graphite Kropfmühi [GKR-ETR] are planning on utilizing modern geophysical techniques, and electrical surveying to identify graphite targets on their concessions in Sri Lanka. In South Australia graphite exploraM AY 2 0 1 3

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