Exploration company Pula Group is on trajectory to start production at its Ruangwa graphite project in Tanzania within 9-12 months, after it secures financing, the company told S&P Global Commodity Insights in an interview.
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Register NowThe company said the project already had a NI 43-101-compliant resource estimation of 140 million mt and a valuation of $160-220 million, with the necessary studies to transition to a mining license already started.
Ruangwa's orebody was uncomplicated, shallow and readily accessible, which lent itself to a simple open pit mining operation and traditional flotation processing to yield 90%-95% purity in terms of concentrate.
"All of which means with the appropriate level financing, we could be in production in 9-12 months," Pula Chairman Charles Stith said, adding that conversations were ongoing with investors.
He added that Pula was also in offtake conversations with a number of parties and had planned visits in Q4 to Singapore, Japan and Hong Kong, as well as a trip to UAE and Saudi Arabia.
Stith said the US, EU and UK were all part of the Minerals Security Partnership and had an interest in securing supply chains of critical minerals, which put them on Pula's list for possible offtake agreements.
Apex Commodity Markets was assisting Pula in identifying potential offtake partners and the companies had already executed a memorandum of understanding with an unnamed Asia-based trader that was convertible to an offtake agreement, with the ultimate end-user to be a large battery producer.
Pula President Mimi Stith noted that the project was looking at 30% fines, which was what was used in lithium-ion batteries, and 30% jumbo flakes, which commanded the highest prices on the market, enabling the company to respond to diverse offtakers.
Exploration company
Charles Stith said that, while Pula had a plan to develop the Ruangwa project, it was in essence an exploration company that identified, de-risked and proved projects up to a point where they became attractive to the open market.
"We are prepared and are soliciting buyers for the project," he said, however added that Pula was ready to develop the first pit of the project, which was why it was in offtake conversations.
"Graphite is now a hot commodity because of this global green energy revolution. Worldwide, China has dominated this space, countries are looking for other options and alternatives and so we're prepared to go anywhere and at any time to talk to potential offtakers, investors or potential buyers," he said.
There were two paths of entry for any potential investor, he said, namely project-specific funding, or investment in Pula Group, which would mean an interest in all four of its graphite licenses in Tanzania, as well as other assets it intended to acquire.
Pula had set up a newco in Mozambique exploring for lithium and manganese and intended to set up similar companies in Kenya and Malawi by the end of the third quarter of 2024 to explore for other critical minerals.
"We are continuing to look at projects across the continent. Our approach to doing these sorts of deals and projects is attractive to the point in that we're getting inquiries from across the continent and so one of our challenges is going to be to ramp up in order to take advantage of the opportunities that are being brought to our doorstep," Charles Stith said.
Pula had received an investment from a Minneapolis-based firm Brown Venture Group 18 months ago and was in negotiations with the Industrial Development Corporation of South Africa, he said.
Tanzania supportive
Pula had found the government of Tanzania to be quite supportive, with investor friendly mining regulations and government bodies open to communicating with investors one on one and through bodies such as the Tanzania Chamber of Mines.
One of the attractive aspects about having a project in Tanzania was that the country had significantly upgraded its infrastructure facilitating exports and had been proactive in creating an environment for mineral opportunities to be explored and mined, which Charles Stith said underscored the government's awareness of the country's important role in the green revolution.
"Tanzania is a great place to do business, as the government understands the importance of creating an enabling environment," he said.
Mimi Stith noted that the Ruangwa project was located in an area where the port, roads and power had been expanded and upgraded.
The project was 225 km from the deep water port of Mtwara, which had a current capacity of 1 million mt/year and gave access to a number of markets, including Asia and Europe.
The government was also paving the road to the port and upgrading the ports capacity, which was scheduled to be completed in 2024, "setting the stage for an easily accessible mining and processing hub," she said.
"The government is actively preparing the infrastructure to support a real boom in the graphite space. This belt in Tanzania is one of the world's largest graphite belts and it is extremely high quality and the government of Tanzania has realized for years now that there is an opportunity to make Tanzania a hub for mining and processing, because of the graphite belt, in addition to other critical minerals in the country," she said.
Looking at the graphite market as a whole, Charles Stith noted that China still denominated, as was reflected in the pull back of proposed tariffs on Chinese graphite and graphite products.
"The Biden Administration is proposing a 25% tariff on Chinese graphite but, not until, 2026 because the US doesn't have an ex-China battery supply chain. Africa has the mineral potential to be the critical minerals hub for the world," he said.
Platts assessed flake graphite on a CIF Northeast Asia basis at $480/mt June 14, unchanged from its launch on March 18. The price reflects materials in Northeast Asia normalized to Japan's main ports.