As initial production continues at the expandable graphite joint venture operations near Pune in India, Evion Group NL (ASX:EVG, OTC:EVIGF) is readying for another key milestone with first shipments scheduled this month.
Production progressed well at the 50:50 JV in December 2024 with operations on target to complete production of the first order of 400 tonnes, which is to be shipped to Europe over the forthcoming months.
Significant development
Evion’s managing director David Round said: “I recently visited site again and it was pleasing to see that significant development continues at our expandable graphite facility near Pune, India.
"From November 6 to mid-December 2024, around 120 tonnes of material was produced or partially treated in preparation for packing and export over the next month. This production is part of our first order of 400 tonnes scheduled for production and export during Q1 2025.”
100% sold
Initial production is expected to yield 386-400 tonnes of expandable graphite with 100% of this material sold and to be shipped, as directed by Evion’s buyers, as quickly as possible.
An additional 500 tonnes of concentrate is on site ready for production in the second and third quarters of 2025 with material ordered in advance on favourable pricing terms.
The average pricing achieved for the first sales of production is in the range of US$3,000-$3,300 per tonne (FOB) and the JV expects production costs to be in the range of US$1,500-$1,750 per tonne with potential for future cost savings in the short term.
Outside main processing centre at PGT (NYSE:PGTI) operations.
Set for productive 2025
Round said this progress had set the company up for “a productive 2025 year of production and exports from India”.
"In addition to this, we have secured another 500 tonnes of material on favourable pricing and credit terms and this graphite concentrate is now ready, on site, for processing and export over Q2 and during Q3 2025. It is expected that much of this production will also be shipped to Europe.”
A maintenance schedule for several days occurred late in December 2024 to coincide with the disposal of effluent by government contractors and production has now resumed as planned.
Previous delays with the disposal of effluent by the local authorities have been resolved and Evion expects production levels to be relatively consistent in the future.
The JV is completing the installation of its own effluent treatment plant (ETP) which will result in recycling 95% of water used on-site with technology unique to the production process and extremely environmentally friendly.
Further production guidance will be provided this quarter with additional details of new sales and buyers while the company also expects sales prices to be about 10% higher for sales in Q2 and Q3 of 2025.
Additional supply
During November Evion secured the supply of additional graphite concentrate on the same favourable FOB-based pricing terms to that achieved mid-year. Terms were also negotiated so that the JV does not need to pay for this product until it is processed and sold to end users.
Given these favourable terms, it was decided to secure this supply which now means the JV has enough graphite concentrate on site for almost the first six months of production. This provides for enormous certainty on pricing and supply.
Strong demand for the expandable graphite should result in the JV selling more than 2,000 tonnes over the first full year of operations, with gross revenue expected in the range of US$6 million to $7 million.
The plant has the capacity to produce a further 500 tonnes of material and Evion is confident that production levels can be achieved in the medium term to increase sales volumes.
Strong demand
Demand for material has been strong and the JV is assessing several offers and options to sell additional material to global markets.
In addition, the JV’s board is updating its earlier study to assess the viability of expanding annual production to 4,000 tonnes, effectively doubling production.
The previous assessment had indicated that the overall capex requirements (equipment) would be in the range of US$500,000-$750,000 with the expanded plant able to produce an additional US$6 million worth of revenue from sales per annum.
Given the robust operating margin of approximately 50% and strong demand for the JV’s product, there is considerable merit in pursuing this opportunity.
Global growth
The global expandable graphite market is projected to grow at a CAGR rate of 7% from 2024 to reach US$707 million by 2030 fuelled by its extensive application across a variety of end-use industries such as automotive, aerospace, electronics and the energy storage sector due to the materials thermal conductivity, chemical inertness and lightweight properties (source: Lucintel market research, August 2024).
With the rise in renewable energy sources and the need for efficient energy storage solutions, expandable graphite is being increasingly used in batteries and supercapacitors, driving market growth.
Continuous advancements in manufacturing processes have led to the development of cost-effective and high-quality expandable graphite products which, in turn, is fuelling market expansion (source: Transparency Market Research & GlobeNewswire, March 2024).
Use as a fire retardant
Expandable graphite can be pressed into sheets and used for heat and fire protection in applications ranging from building materials to many electronic uses.
Following a number of global fire disasters, China, the European Union, Japan and Korea now require all future buildings to be constructed with expandable graphite, and Australia has also placed restrictions on non-flame-retardant building construction leading to an increased use of expandable graphite.
China’s demand for expandable graphite alone is estimated to be 2 million tonne pa (source: Stockhead).
Massive future demand
Benchmark Mineral Intelligence recently highlighted a disconnect between critical minerals mines and the demands for batteries, EVs and energy transition and noted the following points (source: Benchmark Minerals Intelligence, October 2024):
- Demand for graphite is expected to increase between 2018 and 2050;
- China’s supply of graphite is expected to fall from 67% to 39% by 2033;
- 300 new graphite mines will be needed by 2035 to meet demand; and
- The global graphite market is expected to grow to US$21.6 billion by 2027 with pricing expected to be more stable as demand volumes increase.
Progress in Madagascar
Meanwhile at Evion’s Maniry Graphite Project in Madagascar, the local community last month issued a signed statement outlining their strong support for the development with a further meeting scheduled to conclude formal agreements with government endorsement.
Additionally, the Mines Minister of Madagascar has formally endorsed the conversion of Evion's remaining Exploration (PR) licences to Exploitation (PE) licences that permit the company to develop and mine graphite.
Evion said these developments were very significant and positive, and consultation had continued with the local community and government authorities on the best way forward over the next few months.
A series of meetings are scheduled with the Madagascan mines ministry, their technical advisors and representatives from Evion for the third week of January 2025 and the Evion MD will be in attendance.
It is proposed that a framework agreement be concluded at these meetings for development to begin over the forthcoming months. Ongoing consultation with EU representatives will take place as part of achieving an agreed framework for the future.
"In addition to our operations in India, the Evion team in Madagascar has made great progress with licence conversions and community development agreements executed over the last month and I look forward to meeting officials in Madagascar this month to discuss our development timeline plans, offtake agreements and proposed funding for Maniry,” Round said.
"This is indeed an exciting time for Evion and we look forward to providing further information over the forthcoming months.”