Shandong gold expands influence in African mining with major Graphite project acquisition

Shandong Gold, a prominent Chinese mining company, has solidified its presence in the African mining sector by securing a majority stake in a significant graphite project in Mozambique. This strategic move bolsters China’s dominance in the global graphite market, essential for the burgeoning electric vehicle industry.

On 2 July, Triton Minerals announced the signing of a binding agreement to sell 70% of its graphite assets in Mozambique, including the Ancuabe project, to Shandong Yulong Gold for AU$17 million (approximately US$11.3 million).

This project, with a processing plant capable of handling one million tonnes annually, is projected to produce about 60,000 tonnes of graphite concentrate each year over a span of 27 years, according to a feasibility study from 2017 cited by Agence Ecofin.

In April 2023, Triton Minerals had entrusted the initial technical design (FEED) of the Ancuabe graphite processing plant to Yentai Oriental Metallurgical Engineering (YOME), a Chinese engineering firm.

The growing demand for graphite, driven by the surge in electric vehicle sales, has prompted Triton to expedite the development of its Mozambican asset.

Andrew Frazer, Triton’s Executive Director, expressed optimism about the transaction, stating, “We believe this transaction is the best way to generate value for shareholders in a timely manner, considering Shandong Yulong’s size, balance sheet, and commitment to developing and operating the graphite assets in Mozambique.”

Triton Minerals retains a 30% interest in the project, allowing the Australian company to maintain exposure to the graphite market while seeking diversification opportunities within its portfolio.

Mozambique stands as Africa’s leading graphite producer, home to Balama, the world’s largest graphite mine outside of China. This acquisition is poised to enhance China’s already dominant position in the global graphite market.

In October 2023, the Chinese Ministry of Commerce had announced new export permit requirements for certain graphite products, effective from 1 December 2023.

These restrictions aim to exert pressure on Europe and the United States, both of which heavily rely on China for strategic metals.

As the world’s top producer of natural graphite, China accounts for 67% of the global supply, with the U.S. Geological Survey noting that over 90% of the world’s refined graphite, crucial for electric vehicle battery anodes, is processed in China.

Shandong Gold’s latest acquisition underscores the strategic importance of securing key mineral resources as the demand for electric vehicles continues to climb, reinforcing China’s pivotal role in the global supply chain for critical battery components.