Chemistry
Carbon is the basis of all life on Earth. Carbon is also the basis of an enormous array of organic chemicals, such as hydrocarbons, and some important inorganic chemicals, such as carbon dioxide.

Carbon can also bond with itself to form graphite, coal and diamonds. Graphite is comprised of stacked two dimensional (“2D”) layers of carbon atoms in a hexagonal lattice (similar to a honeycomb). The layers are known as graphene layers (more on this below) and they are stacked such that the first layer is aligned with the third, the second with the fourth, and so on.

The bonds within the graphene layer are very strong. They are known as sigma bonds (description simplified for clarity) and give diamonds, where the bonds occur in 3D, its very high hardness. The graphene layers are held together by weak bonds, pi bonds, that allow the graphene layers to be easily pulled apart, as occurs when using a pencil.

History
Graphite was used as a surface finish on ceramics from as early as 750BC. Skipping forward a few years, a large graphite deposit was discovered in the early sixteenth century near Borrowdale, England. Legend has it that the locals’ sheep were getting black marks on their coats when in the vicinity of a large mass of black rock. When investigated it was found that sticks of graphite could be broken off and used for marking things.

A little later, the most important use of Borrowdale graphite was to provide a refractory lining to the molds used to make cannonballs. This resulted in better formed cannon balls that flew further and more true.

While attempting to make diamonds, Edward Acheson made carborundum (silicon carbide, second hardest material to diamond) by heating clay and carbon to very high temperatures. Acheson patented his discovery in 1893 and commenced commercial production. Carborundum was, and still is, critical for the mass production of precision ground metal parts.

With further experimentation Acheson discovered that by heating carborundum to around 4,150oC the silicon vaporises, leaving behind graphitic carbon. This was the first production of synthetic graphite.

Uses  
Scribes in ancient Egypt, Greece and Rome used a stylus made of lead metal to write on papyrus. This is why today we call the graphite core of a pencil “the lead”. But pencils today are only a minor use of graphite. Because of its unique chemical, electrical and physical characteristics, both natural and synthetic graphite are used in innumerable industrial applications.

It is used in refractories, electric arc furnaces, in steelmaking, in construction materials, paints, lubricants, in motors, generators, electrical equipment, batteries and energy storage, lubricants, brake pads, gaskets, nuclear reactors, rubber, flame retardants, insulation, fibres, nanotubes.

Natural Graphite
There are three types of natural graphite: flake, amorphous and vein. These will be described briefly below. Most natural graphite is used in refractories, brake linings and steelmaking, followed by a myriad of other uses, with only minor amounts used in electrodes or batteries.

Flake graphite forms from either organic (such as algae) or inorganic (such as carbonate) carbon, after being subject to high pressure and high temperature over considerable time. Deposits of flake graphite are found worldwide. Flake graphite is generally mined from an open cut, crushed, and then floated 1.  It is then washed, dried and packaged. It should be noted that not all flake graphite deposits can be economically processed.

After successful flotation the flake typically grades in purity from 80% to 95% carbon, depending upon the provenance. The balance is “intercalated ash”, which itself has characteristics that may affect the value of the graphite. Aside from grade, flake size is the most important economic factor. Flake size cannot be determined with the naked eye, but requires microscopy. It requires further chemical or thermal processing for many applications, commonly to at least 98% carbon.

Amorphous graphite looks a little like coal but it is more dense, slippery and soft. It is not actually amorphous but microcrystalline. It is formed by the metamorphism of high grade coal – anthracite. The metamorphism, essentially an increase in pressure and temperature, converts the anthracite into microcrystalline graphite. It tends to be lower grade than other types, with a carbon range of 60% to 90%. It is mined in a similar way to bulk commodities such as coal and is difficult or impossible to beneficiate.

Vein graphite is only commercial mined in Sri Lanka. It is known to occur elsewhere around the world and the aforementioned Borrowdale graphite is of vein type. The deposition of vein graphite is not well understood but is assumed to have been deposited from a fluid phase of graphitic carbon. It is high grade, typically at least 90% carbon and can reach 99.5% graphite in situ. It is mined by typical narrow vein underground methods.

Synthetic Graphite
Natural graphite forms at moderately low temperatures and modest pressures in the Earth’s crust, over an assumed period of several million years. While the pressure and temperature required are easily achieved by man, the time is obviously problematic. As described above, this was overcome when Acheson discovered that graphite could be formed in an electric arc furnace at very high temperatures.

It is typically manufactured by variations of the Acheson process, but also by other methods such as magnetic induction. The process is chemically complex and varies depending upon end product. The following description is brief in the interests of simplicity and clarity.

The process starts with a carbon feedstock that must be amenable to graphitisation, such as certain petroleum cokes (the coke is the residue from a petroleum coking process, such as cracking or fractionating). It first calcined (heated in a furnace) to remove volatiles and then fluidised to allow molecular re-organisation into a pre-graphite lattice.

The next step will depend upon the ultimate form and use of the graphite. If it were a graphite electrode, by way of example, the coke and certain additives would be formed into a shape and then heated to remove more volatiles. It would next be heated in an “Acheson –type” furnace to 2,500oC or more and then left to cool for a week or so.

Synthetic graphite can also be made by chemical vapour deposition. This is called pyrolitic graphite and is formed by high temperature decomposition of hydrocarbon gases under vacuum. The carbon is then deposited on a substrate.

Synthetic graphite is made to a variety of specifications that suit the specific needs of the end user. Most synthetic graphite is used in electrodes (including batteries), followed by the manufacture of carbon fibres then other uses such as blocks and powders.

Finally, it should be noted that lithium ion battery makers prefer synthetic graphite for reasons of quality control  and various technical advantages. Today up to 95% of graphite used in batteries is synthetic. Further it can be produced anywhere in the world and is thus not subject to vagaries of supply and pricing.

Graphene
Graphene, the single layer of graphite, was first isolated by Professors Konstantin Novoselec and Andrew Geim at Manchester university in 2004. They won the Nobel prize for physics in 2010 for “ground-breaking experiments regarding the two-dimensional material graphene”.

Graphene is commercially available in various forms and is primarily used by the research industry. It is the thinnest material ever made. At a thickness of around 0.35 nanometres, three million sheets would make a stack only 1 millimetre high. It is flexible, can be stretched, is extremely strong, almost invisible and conducts heat, light and electricity.

The list of potential future uses for graphene seems to grow daily. Typical areas of research include stiffer, stronger composites, high frequency transistors, low cost display screens, light transmission, storing hydrogen for use in fuel cells, medical diagnosis and ultra-capacitors that may replace lithium ion batteries.

There are a number of other graphite products that are either niche, or not relevant to this commentary.

Production & Resources
Production of natural graphite amounted to around 1.1 million tonnes in 2011, of which about half was flake and half amorphous, with a very small amount of vein graphite out of Sri Lanka. Worldwide production of synthetic graphite was around 1.0 million tonnes in 2012. Consumption of natural graphite is expected to fall in 2012 as a result of slowing economies worldwide.

China supplies about 70% to 80% of the world’s natural graphite, about half of which is low quality amorphous. Other top producers include Brazil, India, North Korea and Canada.

There is no shortage of graphite in the world. In January 2012 the United States Geological Survey reported world reserves of 77 million tonnes, mostly in China and India, and resources of 800 million tonnes of recoverable graphite.

Price
Graphite is not a commodity, such as copper, but rather a specialised industrial product. There are many different specifications for both natural and synthetic graphite and thus a huge range in prices. Therefore the prices presented below for early 2012 should be treated as indicative average prices only. Dollars are USD.

Flake graphite ranged in price from $1,400 to $3,000 per tonne, with price primarily, but not only, depending upon carbon content and flake size. Where the flake has been subject to further thermal or chemical processing the price can range from $4,500 to $7,000 per tonne. Amorphous powder ranged in price from $600 to $800 per tonne.

Natural graphite prices, like many other commodities, have seen a dramatic increase in prices over the past 10 years. For example, large flake has gone from a price range of $500 to $750 per tonne in 2002 to $2,500 to $3,000 per tonne this year. However the price appears to have peaked and is currently on a downward trend.

Synthetic graphite prices cover a broad range up to around $20,000 per tonne. This applies even more to graphene. For example single layer (0.35 nanometres thick), high porosity graphene can fetch up to $300 per 500 milligrams. That is $600,000 per kilogram, although unit prices are reduced for such large quantities.

Outlook
There appears to be a euphoric bubble in Canadian natural (mainly flake) graphite explorers and some enthusiastic inflating is underway in Australia right now. Common themes are that: the world is running out of graphite; China controls the market and is turning off the tap; use will sky rocket because of a perceived massive demand for lithium ion batteries in everything. Is the euphoria justified? First a few facts.

There is no shortage of existing reserves and resources of natural graphite in the world. With reference to the above, perhaps enough for 870 years at current rates of consumption. Further, exploration now underway is finding even more.

Because graphite lingered at a low price for many years prior to 2002, numerous mines were forced into closure. The trend has reversed and  a number of these are in the process of re-opening.
The amount of flake graphite currently used in the production of lithium ion batteries is negligible, about 5% of the total. Further, the flake requires significant processing before it can be used. This processing causes significant graphite loss and can cause significant pollution. Thus, while use can be expected to grow over time, it is quite price will rise and thus reduce its competitive edge over synthetic graphite.

The world market for flake graphite is tiny. Stephen Riddle 2, a leading expert in the carbon and graphite industry, was interviewed on 29 May 2012 by The Critical Metals Report (via Mineweb). He estimates that the world’s total graphite market is around $13 billion, of which natural graphite is only worth $1 billion. So all the aspiring flake graphite producers are fighting to enter a space that has a size somewhat south of $1 billion?

So, while there will undoubtedly be growth in demand for flake graphite in the years ahead, I recommend extreme investment caution.

 

—oo0oo—

 

1
To “float” an ore is to subject it to froth flotation. The ore, as a slurry, is fed into tanks to which flotation agents have been added. Air is injected into the base of the tank and forms bubbles of the flotation agents. The ore, in this case graphite, attaches itself to the bubbles and floats to the surface, while the waste sinks.

2
Stephen Riddle is CEO of Asbury Graphite Mills Inc. Asbury is the world’s largest independent miner, manufacturer and supplier of all forms of graphite.

01 June 2012 Commodities