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Ceylon Graphite wins environmental protection licence renewal for K1 mine

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With Environmental, Social and Governance (ESG) issues an increasingly significant factor in mining approvals, Ceylon Graphite (TSX-V: CYL) has received renewal of its environmental protection licence from the Central Environmental Authority of Sri Lanka for its K1 graphite mine.

The licence renewal allows Ceylon Graphite to continue graphite operations at the K1 mine in Sri Lanka’s Western Province for another three years and propelled its share price up 5.1%.

Ceylon Graphite chief executive officer Don Baxter said he was “very pleased” with the technical staff maintaining compliance with the applicable environmental standards.

He added that the company was looking forward to applying these standards to its production growth vein graphite prospects in Sri Lanka.

Environmental licence brings clarity to graphite refiners

The approval provides confidence for Ceylon Graphite investors and original equipment manufacturers (OEM) seeking a secure source of graphite.

Mr Baxter said that the company hoped OEMs will be encouraged to build processing plants near the many lithium-ion battery factories being rolled out, all of which will need a steady supply of refined graphite.

Lithium-ion batteries use processed graphite for 95% of the anode, making graphite likely to be a sought after material for decades to come.

Currently battery manufacturers are entirely dependent on China for refined graphite, which results in the kind of supply chain hiccups highlighted and exaggerated by the C0VID-19 pandemic.

According to Mr Baxter, China’s advanced battery production facilities would be first in the queue for supplies of its refined graphite, leaving other countries scrambling.

Top grade Sri Lankan graphite

The graphite extracted at the K1 mine contributes 1% to the world’s supply, but has the highest in-situ  (when water is treated directly with chemical reagents rather than being passed through a treatment plant) purity in the world.

Sri Lankan graphite is said to be easily upgradable for several applications including electric vehicle and battery storage, healthcare, construction and paints.

Graphite is an exceptional conductor of electricity or heat and can withstand extreme temperatures – it is also chemically inert.

Mr Baxter compared graphite to silicone which, while good at moving energy, “expands and contracts during charging and discharging, which makes it unsuitable for batteries.”

Synthetic graphite is also used in the manufacture of batteries; however, it has environmental downsides, being a refined oil product and constructed from petroleum coke, somewhat cancelling the benefits of the electric vehicle.

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ASX:CYL