Tesla battery plant will need 6 new flake graphite mines – by Simon Moores and Andy Miller (Industrial Minerals – March 7, 2014)

http://www.indmin.com/

$5bn ‘gigafactory’ to spark EV uptake; battery graphite demand could double in 6 years with no growth elsewhere

US automotive giant, Tesla, has revealed plans to build a new $5bn lithium-ion battery (Li-ion battery) ‘gigafactory’ which could potentially increase natural graphite demand by up to 37% by 2020.

The factory, which is forecast to start production by 2017, is expecting to have an output of 35 gWh/year by as early as 2020, which would over double the size of the current market. Its important to stress that the plant is in the planning stage and capacities depend strongly on market demand, but Tesla believes it can be the market leader by producing low cost batteries in the USA.

In IM Data’s calculations, Tesla’s plant – which is set to be based in the south-west USA – will consume at least 28,000 tonnes of spherical graphite every year if operating at capacity. This equates to 93,000 tonnes of flake graphite if produced to today’s standards which sees raw material wastage of up to 70%.

If achieved, battery demand for natural graphite will increase 112% from today’s levels of 83,000 tpa. This is assuming no other growth in regions such as Asia which is today’s primary consuming region.

While R&D firms have been actively exploring non-graphitic carbon anode alternatives, the position of graphite anodes as the current material of choice for Li-ion battery producers means the graphite industry is likely to be the beneficiary of this growth.

Whether Tesla plans to utilise spherical graphite – made from large natural flake graphite – or synthetic materials remains unclear.

Nonetheless, expansion of the battery market for electric vehicles (EVs) on this scale presents a valuable opportunity to graphite suppliers.

Seizing an opportunity

In 2012, consumption from the battery sector constituted 8% of global natural graphite demand.

For the natural graphite market to supply the type of market growth Tesla are forecasting, large flake graphite output will need to increase significantly over the coming years.

IM Data estimates that large flake grades (+80 mesh and larger) only made up just over 20% of total flake graphite output of 375,000 tonnes in 2013, and with competition for these grades from other traditional markets (i.e. the refractories sector), new projects are likely to be required to meet the battery market demand.

A number of junior projects are aiming to reach production over the coming 2-3 years, many boasting large flake reserves capable of supplying new hi-tech markets.

With China’s large flake reserves depleting, and the efficiency of the country’s spherodization process under question, these projects have an opportunity to play a major role in supplying emerging markets.

Tesla’s rapid EV expansion plans are, however, centered around lowering Li-ion battery costs by over 30% per kWh, which will allow the company to bring a more price competitive product to market.

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