(Ecofin Agency) - Many countries are looking to diversify their graphite suppliers, amid China’s restrictions on its supply chain. South Korea is part of this group and it is ramping up efforts to boost cooperation with African producers. 

South Korea's POSCO sealed, on Sept.3, a $40 million deal with Australia’s Black Rock Mining to invest in Tanzania’s Mahenge graphite project. 

Under the agreement, POSCO will invest in two tranches. 

The first tranche, around $6 million, will raise POSCO’s stake in Black Rock to 19.99%. 

$BKT confirms that POSCO has signed a binding agreement for a US$40m equity investment in Black Rock.

The deal includes POSCO securing long-term fines offtake for Mahenge Module 2, with the proceeds to be used to fund the development of Module 1.

Link to Announcement:… pic.twitter.com/OQRKVF2c1z

— Black Rock Mining (@BlackRockMining) September 3, 2024

The second tranche, about $34 million, will help raise financing for the construction of Module 1 at Mahenge, where a final investment decision is expected soon. In return, POSCO secures purchasing rights for the future production of graphite fines (used in lithium-ion batteries) from Mahenge's Module 2. The company already has an agreement for all the graphite fines from Module 1, potentially bringing the total graphite obtained to 60,000 tonnes per year. 

Mahenge is planned to have four modules supporting an annual production of 347,000 tonnes of graphite over an initial mine life of 26 years.

Presence in Africa’s Graphite Industry

Besides the deal with Black Rock, POSCO has also signed supply agreements with other companies active in African graphite projects. 

The Korea-Africa Summit just wrapped up in Seoul. With 48 African countries represented & 25 heads of state in attendance.

A major emphasis was securing access to Africa’s minerals “critical” to the energy transition, with the establishment of the Korea-Africa Critical Minerals… pic.twitter.com/sInXHdI1UA

— Zainab Usman (@MssZeeUsman) June 5, 2024

In September 2023, for example, it partnered with NextSource Materials, a Canadian firm. Under their deal, Nextsource Materials, which owns the Molo project in Madagascar, should sell yearly 30,000 tonnes of graphite concentrate and 10-15,000 tonnes of purified spherical graphite (SPG) to POSCO. The deal is subject to final signature.

Another firm that POSCO recently teamed up with is Syrah Resources, an Australian firm active in Mozambique. The two inked a deal last March, under which POSCO will buy up to 24,000 tonnes of graphite from Syrah yearly, over six years. 

These various deals align with South Korea's strategy to depend less on China, the world’s top graphite producer. 

"Mozambique and Tanzania are among the countries South Korea will turn to to avoid potential graphite shortages," the South Korean Ministry of Commerce said last October after China decided to impose further restrictions on its graphite shipments.

Last June, South Korea signed an agreement with Tanzania for mining critical minerals like nickel, lithium, and graphite.

Emiliano Tossou