Quantum JV steps closer to US$300m graphite funding deal

Quantum Graphite and its joint venture (JV) partner Sunlands Energy are a step closer to securing a US$300 million (AU$448 million) funding solution to fuel their quest aimed at feeding high-purity graphite into the American economy.

The partnership has confirmed it has received a letter of interest regarding the significant financing commitment from the Export-Import Bank of the United States (EXIM) in Washington. If concluded, EXIM’s financing of the project would be structured to support a complete end-to-end supply chain for graphite to the east coast of the US.

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. When combined, the two distinct stages and related logistics intend to provide a platform for US domestic production of purified graphite.

The JV is expected to deliver up to 100,000 tonnes per annum of high-purity graphite, with potential for further growth.

The proposed funding would be allocated to mining and production of flake graphite concentrate at Uley 2 and the production of high-purity graphite at a Sunlands Energy facility planned for South Carolina, in addition to other logistics infrastructure in SA and in the US.

The United States’ EXIM Bank’s proposed 10-year funding commitment marks a significant milestone for Quantum Graphite and our energy and technology partner, The Sunlands Energy Co.. It is the result of many months work and the bank’s recognition of the critical importance of establishing a US-centric platform for an end-to-end graphite supply chain.

Catalano says such a significant supply chain, which would culminate with the US east coast production of refined flake graphite and its delivery to US anode manufacturers, would “transform the global graphite supply landscape”. It would also mean that the pricing power for the critical resource could be anchored in Australia.

EXIM’s proposal involves a letter of interest and a non-binding indicative term sheet outlining the funding arrangement. It stipulates financing of Project Utile for a 10-year term under the bank’s “Make More in America” initiative that is devised to boost US manufacturing and shore up supply chains deemed critical in the nation.

The project may also be eligible for special consideration under EXIM’s “China and Transformational Exports Program” that is designed to equip American companies with new tools and adaptable solutions for competing against Chinese rivals in specific transformational sectors.

The financing deal is subject to EXIM conducting a successful due diligence process to meet the bank’s general underwriting criteria and authorisation procedures.

China accounts for more than 90 per cent of global production of high-purity graphite – a critical material used in almost all electric vehicle (EV) battery anodes, as well as semiconductors and nuclear reactors. Late last year, the Asian nation sent ripples throughout the battery manufacturing industry by announcing export restrictions on certain graphite products and throwing into doubt the availability of the material in the western world.

Such developments appear to bode well for Project Utile and the JV’s Australian roots.

Uley 2 already holds a 6.3 million-tonne resource grading 11.1 per cent total graphitic carbon (TGC) for a total inventory of 697,000 tonnes of contained graphite. It is supplemented by the nearby Uley 3 deposit where another 59,000 tonnes of TGC have been defined.

However, Quantum believes that further exploration work could unveil a significant upgrade to the existing resource base and stretch the mine life at the project. The group recently revealed plans to launch a 100-hole drilling campaign as part of its resource extension works for Uley 2 and Uley 3.

Quantum seems to be making all the right moves in advancing its JV with Sunlands towards a commercial operation. If the duo can nail down the funding, Project Utile could catapult the two Aussie businesses into becoming influential players in America’s lucrative graphite supply chain.

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