Black Rock Mining has signed a three-year offtake agreement with China’s Heilongjiang Bohao Graphite Company Limited.
Under the agreement, Black Rock Mining will supply up to 90,000 tonnes of graphite from its Mahenge mine to Heilongjiang Bohao Graphite per year.
More precisely, Black Rock Mining will supply Heilongjiang Bohao with 30,000 tonnes of graphite in the first year, 50,000 tonnes in the second year, and 90,000 in the third year.
The Mahenge mine operates under Mahenge Resources in Tanzania, a wholly-owned subsidiary of Black Rock Mining.
The graphite miner expects a steady production of 240,000 tonnes of graphite per year when production starts in 2019.
They will determine the price for the agreement within the next 12 months. After that, they will update the price every quarter depending on the price of graphite in the market.
In general, analysts expect the price of graphite to soar over the foreseeable future for two reasons:
1) Graphite is a major component in lithium-ion batteries that power electric vehicles, smartphones, laptops, and other electronic devices. Reports suggest that electric vehicles will soon replace gasoline-powered cars as they are energy efficient and cost effective.
2) China, a major supplier of graphite, has seen a decrease in graphite production as the Chinese government is shutting down pollution-causing industries in the country, many of which are graphite. According to Bloomberg, the graphite crunch has already had repercussions all over the world with several graphite companies gaining market value.