China Minmetals develops Heilongjiang graphite mine

State-owned diversified metals company China Minmetals has established a graphite processing firm in northeast China's Heilongjiang province, one of the country's major production hubs for the material.

The move aims to develop an integrated industrial chain from its Yunshan graphite mine in the province's Hegang city.

The mine has proven reserves of 1.026bn t, which has the potential to be the largest graphite mine in Asia. More details including the designed capacity and launch dates were not released.

The firm has obtained mining certificates for the Yunshan graphite mine and has completed project's feasibility study. Construction of the main infrastructure of the facility for mining, processing and spherical processes, has been completed. Other preparatory work including forest and land requisitions and engineering surveys are underway, according to the Hegang local government.

The firm, under the name of China Minmetals (Heilongjiang) Graphite Industry, with a registered capital of 1.8bn yuan ($257mn), is jointly incorporated by China Minmetals, Hegang city government, Luobei county government, Heilongjiang Transportation Investment Group, China First Heavy Industry Group and China Resources Group. Details regarding the shares and respective investment amounts were not disclosed.

Graphite, the anode material used in lithium-ion batteries, is forecast to account for nearly 53.8pc of total demand from energy storage technologies up to 2050, according to a World Bank report.

Chinese graphite producers have been ramping up output over the past few years as they look to meet growing demand from the lithium-ion battery industry. China's Aofeng Graphite New Material at the end of May started to build a graphite processing plant in Mudanjiang city in Heilongjiang province, with designed capacity of 1mn t/yr of graphite ore and 60,000-80,000 t/yr of graphite powder.

Argus assessed prices for 94pc grade flake at Yn3,300-3,900/t ex-works on 7 July, unchanged from a week earlier. Downstream battery producers have focused on fulfilling orders, given limited spot demand. Producers have reduced operating rates to keep flake inventories low. A Heilongjiang-based producer offered at Yn3,700-3,900/t yesterday.

China is also a major graphite exporter globally, with graphite flake exports in January-May of 42,014t, down by 17pc from 2019, according to customs data.

Export prices for 94pc grade flake were unchanged from a week earlier at $470-550/t fob yesterday. Demand from outside of China is recovering slowly. There was a spot offer from a Shandong-based trading firm at $540-550/t yesterday, but no deals were concluded.