South Korea attempts to secure African graphite supplies as China introduces export curbs

South Korea is turning to Africa as China tightens export controls on critical minerals. Earlier this year Posco International, a major steel conglomerate with a significant battery materials business, signed memorandums of understanding with mining firms in Madagascar and Tanzania to strengthen its graphite supply chain. In Madagascar, it penned an agreement with Canadian mining entity NextSource Materials to obtain 30,000 tonnes of flake graphite or 15,000 tonnes of spherical graphite annually for ten years from its Molo mine. In Tanzania, Posco inked a deal with Australia's Black Rock Mining for the long-term supply of graphite from its Mahenge mine in exchange for an additional equity investment in the miner. Meanwhile, EV battery maker LG Energy Solution reached a preliminary deal with Yahua, a Chinese lithium producer, for the production of battery-grade lithium hydroxide in Morocco. This material is essential for manufacturing cathodes, which are fundamental components in EV batteries. LG sees this deal as a chance to fortify its supply chains while also leveraging Morocco's strategic advantage due to its free trade agreements with both the US and the EU. Under the US Inflation Reduction Act, EVs assembled in North America with minerals sourced from the US or its free trade partners qualify for tax credits. LG's investment also stands to benefit from the EU’s Critical Raw Materials Act, which is akin to the US legislation concerning mineral supply chains.

The Korean move comes as China, which refines more than 90% of the world’s graphite, has started to tighten export controls on critical minerals, Although graphite may not attract as much attention as lithium and cobalt, it is vital for the production of electric vehicle (EV) batteries, an industry in which Korea is responsible for a quarter of the world's production.

Africa's contribution to global graphite flake supply was around 9% in 2021, with Mozambique and Madagascar being the continent's primary producers. Yet, Africa has a significant project development pipeline that could elevate the continent's share to more than 26% of global graphite production by 2026.

Mozambique is believed to possess between 20% and 40% of the world's high-grade graphite deposits, with the majority situated in the northern Cabo Delgado Province. This has drawn mining companies like Australia's Syrah Resources to the area. The commissioning of Syrah's Balama mine in 2017 was a notable industry event, as the project was recognised for having the world’s largest reserve tonnage and the highest grade of graphite. However, its operations have been disrupted by container shipping issues and security challenges due to militia activity in the area. Earlier this year, London-listed Tirupati Graphite acquired two graphite projects in Mozambique from Australian firm Battery Minerals, setting its sights on achieving 8% of global production by 2030.

Tanzania has six graphite ventures, either under construction or in the final stages of feasibility studies, which could collectively yield over 450,000 tonnes per year. The Mahenge project, overseen by the Australian-listed company Black Rock Mining, is one of the largest in development. This past April also saw the Tanzanian government formalising agreements with three Australian entities – Peak Rare Earths, Evolution Energy Minerals, and Ecograf – to mine graphite and rare earth elements. President Samia Suluhu Hassan has articulated a goal to boost the mining sector's GDP contribution to a minimum of 10% by 2025, up from 4.8% recorded in 2018.

 

References

‘Mozambique’s glittering graphite mining boom’, The Africa Report, 22 January 2019

‘Asian battery makers jeopardise raw materials access by delaying deals’, Financial Times, 05 November 2022

‘Africa’s growing graphite mining potential’, S&P Global, 26 December 2022

‘LG Energy Solution signs deal with China's Yahua on lithium supply in Morocco’, The Korea Times, 05 April 2023

‘Tanzania signs $667 mln deals for rare earth and graphite projects’, Reuters, 17 April 2023

‘What Sh1.5 trillion pacts with mining firms herald for Tanzania's economy’, The Citizen, 19 April 2023

‘Tanzania, Australia firms sign $667m deal to mine rare earths’, The East African, 19 April 2023

‘Tirupati eyes 8% of global graphite market after Mozambique acquisitions’, Reuters, 27 July 2023

‘Black Rock signs offtake and investment MOU with Posco’, Black Rock Mining, 04 September 2023

‘Posco International expands secondary battery material business in Africa’, Posco International, 04 September 2023

‘China, world's top graphite producer, tightens exports of key battery material’, Reuters, 20 October 2023

‘South Korea to tap Africa as China tightens graphite controls’, Bloomberg, 23 October 2023