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How to Invest in Graphite in Australia

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Australia isn't a producer of graphite (yet), but three states in the country are home to millions of tonnes of reserves and resources.

Graphite has been growing in popularity in recent years as its applications as a battery mineral are realised and as the popularity of electric vehicles grows around the world.

A form of carbon, graphite is highly conductive and is invaluable in electronics. Natural graphite comes in three different forms, each with their own valuable applications in modern technology, making it a sought-after commodity that supply lines for many industries around the world rely upon.

Graphite isn't produced in Australia (yet), but the country sits on 5 million tonnes of ore reserves, and 7.97 million tonnes of economic demonstrated resources (EDR), as per government data published in 2022.

For reference, global production of graphite is relatively small — 1.3 million tonnes were produced around the world in 2022, with the lion's share (850,000 tonnes) coming from China.

But back to Australia, whose graphite reserves and EDR are shared between three states: Queensland, South Australia and Western Australia.

Exploration is on the rise in Australia and around the world for graphite, with demand for the mineral set to grow thanks almost solely to the proliferation of electric vehicles.

The Australian government is aware of this development, reporting that it is confident interest in the mineral will not only remain high, but will increase as time goes on. In fact, graphite is classified by the nation's government as a critical mineral, and the country has dedicated significant resources to researching market gaps and opportunities available.

Graphite in Australia: Potential producers

The government has identified five projects between Western Australia and South Australia that have the potential to bring Australia to the table when it comes to production.

However, as of the most recent government report, none of them are producing. One asset is being explored, another is in the prefeasibility stage and the remaining three are in the feasibility stage.

In February 2022, the Australian government approved a total of AU$239 million in loans as part of its AU$2 billion Critical Minerals Facility to two graphite companies. These companies were Renascor Resources (ASX:RNU) and EcoGraf (ASX:EGR), who are looking to produce purified graphite in South Australia and Western Australia.

Renascor’s Siviour project on South Australia's Eyre Peninsula is one of the more developed graphite projects, with an estimated annual production capability of 123,000 tonnes. The project has been granted major project status by the Australian government, and the company says it has the world’s second largest proven graphite reserve and largest graphite reserve outside of Africa.

As for Ecograf, it owns the Epanko graphite project in Tanzania and a processing facility in Western Australia. The company plans to manufacture battery graphite products in an environmentally friendly manner.

Another notable project is Mineral Commodities' (ASX:MRC) Munglinup project in Western Australia, where a definitive feasibility study was completed in early 2020, with a final investment decision targeted for the second quarter in 2024.

The Munglinup project is Mineral Commodities' second major graphite project, behind its flagship Skaland project in Norway. Munglinup is in the far south of Western Australia, near the port city of Esperance.

Munglinup and Siviour, if they proceed in coming years, would produce a combined 126,500 tonnes of graphite in the early stages, putting Australia well and truly on the leaderboard globally when it comes to graphite production.

The remaining projects — though not as developed or as far along with investment planning — would add another 178,000 tonnes of graphite production if they are constructed as envisaged.

The Australian government has boasted that "the only direction for Australia's graphite production is up," though that is also a reflection of the fact that current graphite production is exactly zero.

More broadly, Australia is positioning itself to take advantage of wider industry gains across the electric vehicle market, and to present itself as a reliable trading partner. Graphite, like rare earths, is classed as a critical mineral by both Australia and the US, and its use extends beyond technology and into national security as well, given its applications as a heat-resistant material.

This is an updated version of an article first published by the Investing News Network in 2022.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Matthew Flood, hold no direct investment interest in any company mentioned in this article.

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