Mozambique’s graphite grandeur
Explore mining in the country with the world’s largest natural.
Mozambique has commercially important deposits of an exceptionally large range of minerals, including high-quality coking coal, graphite, iron ore, titanium, marble, bentonite, bauxite, kaolin, copper, gold, rubies and tantalum. In a regional context, Mozambique may be gaining commercial advantages over South Africa as the latter’s mineral sector experiences substantial changes.
Major tectonic events had impacts on Mozambique. The geology primarily comprises pre-Cambrian metamorphic and igneous crystalline basement rock formed during the Archean and Proterozoic periods 2.5 billion to 500 million years ago. More recently, large basins filled up with content including marine sedimentary rocks.
Australia-based company Triton Minerals Ltd has a stake in Mozambique. Managing Director, Peter Canterbury, said, ‘For Grafex Limitada, Triton’s 80%-owned subsidiary in Mozambique, the geology of the area we explore is not overly difficult, as in many cases the graphite is outcropping at surface and can be identified by rock chip samples. One difficulty is that to determine the deposit’s scale you need to understand its direction and how this impacts the efficiency of mining’.
Syrah Resources is also Australia-based and heavily involved with graphite in Mozambique. ‘The Balama graphite operation hosts one of the world’s most significant graphite reserves – 113 million tonnes (Mt) at 16.46% total graphite carbon for 18.5Mt of contained graphite, allowing for a mine life of more than 50 years,’ the company said. ‘The extremely low strip ratio allows for a simple open-pit mining operation using conventional processing of crushing, grinding, flotation, filtration, drying, screening and bagging. After producing over 100,000 tonnes (t) of graphite in 2018 and becoming the largest in the world, Balama is on track to double that this year with a superior product quality.’
Heavy sands in Mozambique
Mozambique’s multiplicity of mineral wealth is further borne out by heavy mineral sands. These sands, in turn, harbour ore containing zirconium, titanium, thorium, tungsten, rare earths, industrial minerals and sometimes precious metals. They are placer deposits found mainly on beaches, the specific gravity of the mineral grains having created the deposits.
Chibuto, a district in the country’s Gaza province some 200km north of the national capital Maputo, hosts a pilot project producing 400 tonnes per day (t/d) of titanium and zircon ore. Minister of Transport and Communications, Carlos Mesquita, has confirmed that all production is destined for export.
As of May 2019, the Chibuto project employs 450 Mozambicans. This is set to rise to 1,500 next year, by which time the daily capacity is likely to yield 600t of titanium and zircon ore. In annual terms, capacity is intended to be around 5Mt.
Transportation offers both challenges and choice. A 70km railway link from Chobuto to Chókwè on the national railway network is one option. The other is to send the product via the local Limpopo River to the Indian Ocean. At present, contracts have been signed by the national government with the port at Maputo while surveys for a rail route have already been completed by Mozambique Railways.
Taxation and royalties
Syrah Resources and Triton, the two profiled companies, have differing views on Mozambique’s fiscal structure. ‘In 2018, Syrah finalised a binding mining agreement with the government of Mozambique. The mining agreement provides Syrah with clarity around the governing laws, mining rights and other obligations for the Balama graphite operation,’ Syrah Resources said.
‘The fiscal regime includes a 3% sales royalty and corporate tax. The national and provincial government is focused on providing a stable legislative and taxation jurisdiction, as well as strong support for new projects.’
The situation for Triton, however, appears to be different. ‘The tax and fiscal regime in Mozambique is reasonable in comparison to other jurisdictions without being world-class. The tax and royalty rates are okay, but the VAT system on imports is unique and, in my experience in many jurisdictions, is never levied on imports of goods, however, this is the case in Mozambique,’ Canterbury said.
‘And while this VAT is refunded out of revenue, it is particularly damaging to start-up mining facilities which inv
olve significant capital. In addition, the mega-legislation on large projects is a disincentive to undertake such projects in Mozambique.’
Battery industry growth worldwide is expected to generate demand for natural graphite of around 35% over the next three years, and Mozambique is a major supplier in waiting. Canterbury said, ‘Graphite is a key material in lithium-ion (Li-ion) batteries and forms the anodes for these batteries.
Approximately double the amount of graphite goes into these than lithium, so it really is a key ingredient for these batteries. ‘While the focus is on electric vehicles globally – a massive growth area – fixed-storage batteries are a game changer to using renewable energy on a large scale. This, again, needs high-capacity cheap Li-ion batteries, and is also a massive growth area for graphite consumption.’
Mozambique hosts the Balama graphite project, the largest natural graphite mine anywhere, which has reserves of 113Mt at 16.36% total graphitic carbon for 18.5Mt of contained graphite. Mining operations started in early 2018, with Syrah Resources alone yielding 100,000t of graphite by the end of that year. The company is aiming at 350,000t per year in due course, if customer demand justifies it. One such demand is from Syrah itself, which is now developing its downstream Battery Anode Material (BAM) project in Louisiana, USA. Here, the strategy comprises rapid production and qualification of the BAM products to establish a core ex-Asia battery supply chain. Syrah’s BAM project is entering a high-growth market for Li-ion batteries, and Balama’s graphite product mix, which has about 70% of -100 mesh fine flake graphite, is suited for these markets.
Crucial to attaining this market position and to ultimately to become a global provider of high-quality natural graphite will be the ramp-up of Syrah Resources’ Balama operation in Mozambique. This mine has an LOM of 50 years. In terms of quality, the aim is high-purity carbon graphite including the capacity to produce 98% carbon. The ability to produce this quality provides value-in-use advantages including reduced acid usage, energy efficiency and a lower environmental footprint. High chemical purification costs are avoided.
Syrah is actively selling its graphite production in all geographies and all sectors of the market. The biggest consuming region by far is China, which also represents the biggest portion of Syrah’s sales.
Triton Minerals Limited is an emerging graphite producer with three world-class graphite projects in the Cabo Delgado region of Northern Mozambique, arguably one of the world’s best locations for graphite. ‘The company approved development of our flagship Upolo – Ancuabe – graphite project and early works activities are well underway with mining and processing scheduled to commence in the first half of 2020. Ancuabe’s large flake and high-purity graphite is a key differentiator and is well positioned to be a market leader in the expandable graphite market,’ Canterbury said.
Triton, via its interest in Grafex Limited, holds an interest in some highly prospective graphite projects in Mozambique. One is Ancuabe in the proven graphite region of Cabo Delgado in north-east Mozambique. Compared with all other ASX-listed graphite projects in East Africa, Ancuabe is located closest to existing infrastructure and an operating container port.
Another is Nicanda Hill, one of the world’s largest graphite deposits and a globally significant vanadium deposit. It is about 240km by road from Pemba Port in the Cabo Delgado region in northern Mozambique. Nicanda Hill has a JORC inferred and indicated mineral resource of 1.43 billion tonnes. Finally, Triton has operations in Balama South, about 35km south of the Balama township within the same north-east trending geological domain covered by Nicanda Hill. To date, only limited exploration activities have been completed at Balama South project.
Triton’s graphite quality and specification varies between deposits. ‘Our graphite grades in the ground vary between deposits with Nicanda Hill averaging 11.1% total graphitic content (TGC) and Upulo (Ancuabe) averaging 6.6% TGC. However, Upulo beneficiates very well to deliver an average grade of 97.5% and large flake sizing of 59% being large flake or above. This is all via mechanical beneficiation alone and no chemical treatment,’ Canterbury said. He pointed to the tragic fires around the world, which could have been prevented by graphite-based flame-retardants such as those from Upulo. Flame retardation is estimated to be one of the largest growth areas for graphite going forward.
Balama also hosts a significant vanadium resource. This is a byproduct obtained from the graphite tailings during production and is potentially a saleable product as vanadium pentoxide. A metallurgical test programme is set to identify means of optimising the vanadium and thereby enhance its value.
Good transport routes make it easier for both companies to move materials and maximise profitability. ‘We are very fortunate to have sealed roads from our mine to the Port of Pemba. The port itself is a major advantage we have over many graphite projects in East Africa,’ Canterbury said. ‘Over the past 12 months we have seen a tremendous effort by the Port of Pemba to improve the site’s facilities to support larger volumes of containers. These steps are moving to support the future of Cabo Delgado as being the global centre of the graphite world. Work still needs to be done to make this port as efficient as some of the southern Mozambique ports. However, the work done recently has vastly improved this facility.’
For Syrah, natural graphite is transported 490km from Balama to the Port of Nacala, one of Africa’s deepest, and is well-serviced by major shipping lines. Its logistics supply chain performance improved significantly as production volumes increase. In 2018 Syrah shipped and sold 74,000t and, for the first half of 2019, expected to ship about 100,000t.
Canterbury said the company has a policy to have a corporate social responsibility (CSR) plan for each project. ‘We have developed the plan for Upulo and worked with the local communities on identifying projects that will provide real benefits to the local communities we operate in. In our view, CSR is simply good business and part of the licence to operate required for long-term projects,’ he said.
‘Our CSR for Upulo includes a community power program to enable the local villages we operate in to be connected to grid power. However, these activities must be linked to development of the project and will be undertaken once it is in construction. We also require our contractors to have a commitment to local employment and the integration of CSR into their operating plans.’
Syrah aims to ensure the local communities in which it operates are engaged and benefit from the company’s operation. More than 95% of employees at Balama are Mozambican nationals, including 55% from eight local host communities. To date, more than US$41mln has been paid in salaries in Mozambique and the company aims to source from local Mozambican entities where possible and when their level of service is on par with international standards. Programmes include health initiatives, remediation works on the Chipembe Dam, clean water for local villages, and large-scale irrigation and agricultural programmes.
Syrah established the Balama Professional Training Centre (BPTC) in partnership with the Mozambique Institute of Professional Training & Labour Studies. BPTC is a purpose-built learning and development facility in the Balama District. The ambition is to improve the employability of members of Syrah Resources host communities and to train at least 500 community members over the next five years. The company, through its subsidiary Twigg Resources, has also worked with the Red Cross in the wake of recent cyclones in Mozambique.
Mozambique’s position to become the most important graphite supplier in the world is imminent. Heavy investment and development for the product promises greater prosperity for the country. With international companies investing in its assets, plus support programmes to develop the host regions of such deposits, Mozambique stands in a great opportunity to have economic prosperity with social responsibility.