TORONTO (miningweekly.com) – One of China’s primary flake graphite producing regions had been ordered to halt production on environmental grounds, which would take about 10% of the world’s flake graphite supply off the market, the equivalent of 60 000 t/y, UK-based market research firm Industrial Minerals Data said this week.
Given that China produces almost 75% of the world’s graphite and that ‘flake’ is the most sought-after form of natural graphite for value-added, high-technology carbon products, this was a significant development.
The last time a supply shortage close to this magnitude happened in China, was in 2009, which was seen as the catalyst for flake graphite prices reaching over $2 500/t in a year.
Industrial Minerals Data manager Simon Moores said in a report published on Monday that up to 55 miners and processors of graphite in the town of Pingdu, located in the east-coast province of Shandong, had been ordered by the local government to stop production after failing to improve wastewater, dust and gas emissions.
He said it had been called the strictest environmental action in local history. The halt also wiped about 20% of the country’s domestic output off the market.
“The government has been cutting off electricity and water supplies to those companies that fall foul of the new ban. All graphite companies in the region have signed a letter of commitment to cleaning up Pingdu’s flake graphite industry.
“The action was a result of complaints by local residents dating back to the start of this year,” Moores wrote.
The UK-based analyst said the loss of supply over the next six months had coincided with the yearly winter shutdown of China’s graphite producers, which would close their doors between November and February until after the Spring Festival.
“This is expected to minimise the immediate impact, particularly as much of the buying for the Christmas period has now taken place,” Moores said, adding that any potential rebound in demand in the first quarter of 2014 would be expected to add upward price pressures across the world, should the supply gap not be filled by extra production from elsewhere, especially Heilongjiang.
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