The joint venture (JV) partnership between Evion Group NL (ASX:EVG, OTC:EVIGF) and India-based Panthera Graphite Technologies (PGT) has signed a supply agreement for high-quality large flake graphite material to feed its expandable graphite processing plant.
A medium-term agreement has been negotiated for graphite feedstock, securing a steady supply as the two companies prepare to ramp-up production of expandable graphite products to meet strong demand.
The JV partners are also reviewing options for a medium-term upgrade to production for the plant, which has potential to more than double sales volume and revenue at a time of looming graphite supply shortage.
Markets offer powerful opportunity
“On behalf of our JV partner, we’re very pleased to secure these commercial terms that guarantee us a supply of world-class graphite concentrate that has been tested by us and approved for use,” Evion Group managing director David Round said.
“The current ban on China-produced and exported graphite material is causing some increase in worldwide pricing and shortages of supply and, as such, building a strong supply agreement with a reputable partner is important to our ongoing growth and success.
“We’re currently concluding sales pricing for the short term and we look forward to updating the market on this soon.”
Samples of the JV’s graphite material were recently provided to multinational buyers in Japan and the US – the two companies are working to finalise sales pricing agreements for the short and medium-term for offtake and new buyers.
Graphite demand strengthening
The JV is operating in something of a seller’s market at the moment, as restrictions on China, which historically produced 90% of the world’s natural graphite, drive both demand and sale prices higher.
UBS forecasts a six-fold increase in demand for natural graphite in the next 10 years, predicting a deficit by 2025. While exactly how much demand will increase is debated, the analyst consensus seems to agree.
“We are now likely to see a disruption in supply chains and sharp increase in graphite prices,” Nicoya Research founder Jason Hamlin said.
“And this comes after prices had dropped to an 11-year low, down over 50% year on year during June 2023.
“So, the potential for a powerful bounce in the prices for graphite off oversold levels is high.
“Over the longer term, natural graphite and active anode material (AAM) demand is expected to increase four and eight times, respectively, over the next 10 years.”