Quantum Graphite and its joint venture partner Sunlands Energy are one step closer to raising US$300 million (AU$448 million) in funding to help them achieve their goal of supplying the American economy with high-purity graphite.
The Partnership has confirmed that it has received an expression of interest from the Export-Import Bank of the United States (EXIM) in Washington for the significant financing commitment. If signed, EXIM's financing of the project would be structured to support a complete end-to-end graphite supply chain to the US East Coast.
More specifically, Project Utile involves sourcing graphite from Quantum's Uley 2 resource in South Australia and then purifying the material using Sunlands' state-of-the-art technology. Combined, these two distinct phases and associated logistics are expected to provide a platform for US-based production of purified graphite.
The joint venture is expected to deliver up to 100,000 tonnes of high-purity graphite annually, with potential for further growth.
The proposed funds will support the mining and production of flake graphite concentrate at Uley 2, the production of high purity graphite at a planned Sunlands Energy plant in South Carolina and other logistics infrastructure in South Africa and the United States.
The proposed 10-year financing commitment from US-based EXIM Bank represents a significant milestone for Quantum Graphite and our energy and technology partner, The Sunlands Energy Co. It is the result of months of work and the Bank's recognition of the critical importance of creating a US-centric platform for an end-to-end graphite supply chain.
Catalano says such a significant supply chain, culminating in the production of refined flake graphite on the US east coast and its delivery to US anode manufacturers, would “change the global graphite supply landscape”. It would also mean pricing power for the critical resource could be entrenched in Australia.
EXIM's proposal includes an expression of interest and a non-binding, preliminary term sheet outlining the financing arrangement, which will establish funding for Project Utile for a period of 10 years as part of the bank's Make More in America initiative, which aims to boost U.S. manufacturing and strengthen the country's supply chains, which are considered critical.
The project may also be eligible for special consideration under EXIM's China and Transformational Exports Program, which aims to equip American companies with new tools and customizable solutions to compete against Chinese competitors in certain transformation sectors.
The financing agreement is subject to EXIM conducting a successful due diligence review to meet the Bank's general underwriting criteria and approval procedures.
China is responsible for more than 90 percent of the world's production of high-purity graphite – a key material used in almost all electric vehicle battery anodes, as well as in semiconductors and nuclear reactors. Late last year, the Asian country caused a stir across the battery industry when it announced export restrictions on certain graphite products, raising doubts about the material's availability in the Western world.
Such developments seem to bode well for Project Utile and the joint venture’s Australian roots.
Uley 2 already has a 6.3 million tonne resource grading 11.1% graphitic carbon (TGC) and a total inventory of 697,000 tonnes of graphite. This is complemented by the nearby Uley 3 deposit, where a further 59,000 tonnes of TGC have been defined.
However, Quantum believes that further exploration work could significantly enhance the existing resource base and extend the mine life of the project. The Group recently announced plans to commence a 100-hole drilling campaign as part of its resource expansion work on Uley 2 and Uley 3.
Quantum appears to be taking all the right steps to advance its joint venture with Sunlands toward commercial operations. If the duo can secure funding, Project Utile could make the two Australian companies influential players in America's lucrative graphite supply chain.
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