Mineral Resources has withdrawn from the McIntosh graphite joint venture (JV) with fellow-listed Hexagon Resources, in Western Australia.
The two companies last year struck the JV agreement under which Mineral Resources could have earned a 51% interest in the project by managing and effectively funding all of the development costs of the project, to commercial production.
Mineral Resources said on Wednesday that the JV was initially entered into to increase the company’s exposure to battery materials, with the inclusion of graphite, as well as to create additional Western Australian contracting opportunities.
However, the company noted that any future investment in the McIntosh project would not meet its minimum investment return threshold, with the company deciding instead to write off the investment of less than A$5-million into the JV, during this financial year.
Hexagon for its part has told shareholders that it would continue evaluation work at McIntosh in preparation for the rebalancing of the graphite concentrate supply/demand situation, which is forecast to occur in the next three to four years.
For the immediate term though, the company was of the opinion that downstream processing would be more financially attractive.
Hexagon in May delivered a scoping study into a standalone graphite purification and processing plant in the US, which will produce a suite of end products comprising a dozen premium materials across battery and technical/industrial applications.
The scoping study considered a scaled development, starting in the first half of 2020, and initially comprising a qualification plant with the capacity to produce 1 000 t/y of products to verify product specifications.
The operation would then be scaled up to commercial scope with a rated capacity of some 20 000 t/y of products, with additional expansion resulting in the production of around 50 000 t/y of products.
The Stage 1 operation would require a capital investment of some A$27-million, with a further A$135-million required for Stage 2 and A$153-million for Stage 3.
