Renascor Resources signs preliminary graphite deal with major Chinese battery supplier

Renascor Resources ASX RNU graphite deal Chinese battery supplier Shanxi Minguang New Material Technology
The MOU is with one of China’s largest battery material suppliers and paves the way for the purchase of up to 10,000tpa of Renascor’s purified spherical graphite from its proposed intergrated Siviour graphite project.

Renascor Resources (ASX: RNU) has signed a non-binding memorandum of understanding (MOU) with Chinese anode company Shanxi Minguang New Material Technology to supply purified spherical graphite (PSG) from its planned integrated operation in South Australia.

The MOU covers the sale of up to 10,000 tonnes per annum of PSG over a 10-year term.

This represents about one-third of planned production by Renascor.

Renascor is developing a vertically integrated operation consisting of the Siviour mine and concentrator, located inland from Arno Bay on the Spencer Gulf coast, plus a downstream operation to produce PSG.

The company has said previously that, apart from being a low-cost producer, Renascor will have the only in-country mine and battery anode materials operation outside China.

Shanxi Minguang is a subsidiary of Fujian Metallurgical, a Chinese state-owned enterprise with 142 subsidiaries (including three listed ones).

Fujian has a controlling stake in XTC New Energy Materials, China’s largest battery cathode producer, and in Minguang New Material which is developing a 40,000tpa battery anode factory in Shanxi province.

The MOU includes the deal for Renascor and Shanxi Minguang to work together on further validation tests before signing a formal binding agreement.

Demand for EV batteries remains strong

Renascor managing director David Christensen said the MOU is an endorsement of the technical work the company has done in proving up its ability to produce battery-quality PSG.

“Not withstanding uncertainties created by COVID-19, the demand for electric vehicle batteries continues to underpin growing demand for PSG, with the market particularly strong in China,” he added.

Mr Christensen said the company is seeing increasing interest from anode makers for PSG from Siviour.

In July Renascor reported that its battery anode material study has confirmed that graphite from its proposed Siviour mine is able to produce PSG at among the lowest cost of any graphite development in the world.

Independent tests on graphite from Siviour showed it was possible to use it as feedstock for processing into PSG through an environmentally friendly caustic roast purification method.

The results also confirm the potential to optimise the caustic roast circuit by lowering reagent consumption, and potentially further reducing operating costs.

Testing by German graphite specialist ProGraphite has successfully upgraded Siviour spheronised graphite into lithium-ion battery grade 99.97% carbon PSG.

China continues to be the dominant market for PSG.

Chinese anode production capacity currently represents around 85% of global capacity, and over 90% of capacity under construction,” Renascor noted.

The Australian company is at present discussing potential PSG sales with other anode makers in China and elsewhere in northeast Asia, along with manufacturers in Asia and Europe.

The production of lithium-ion batteries is also concentrated in China which holds about 85% (or 600,000tpa) of the market.

The remainder of manufacturing takes place in South Korea and Japan, although there are emerging producers in Europe and North America.

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