ASTANA – The European Bank for Reconstruction and Development (EBRD) is making its first direct equity investment in the Central Asian resource sector, acquiring a 17.36% stake in Sarytogan Graphite Limited, an Australian-listed company engaged in the exploration of the significant Sarytogan graphite deposit in the Karaganda region of Kazakhstan.
Big deal
The EBRD announced on August 9 that it is investing AU$5 million (US$3.3 million) in the company. This investment will support Sarytogan’s development program, including a feasibility study and working capital requirements.
“We are delighted to support the Sarytogan Graphite Project, the first graphite project financed by the Bank, on its journey to becoming a responsibly mined source of battery-grade graphite for Europe and the world. The EBRD is committed to supporting the global transition to a green economy, in particular the move towards wider adoption of electric vehicles, by providing the necessary funding and expertise to junior mining companies extracting critical and/or strategic raw materials,” said Natalia Lacorzana, EBRD Director of Natural Resources, as quoted in the Australian Securities Exchange announcement.
The Sarytogan graphite deposit has the potential to become a leading supplier of natural graphite both regionally and globally. The project’s indicated and inferred mineral resources are estimated at 229 million tonnes, or 28.9% of total graphitic carbon, according to the company.
“Sarytogan is very pleased with this investment from the EBRD. The investment follows extensive technical and legal due diligence by the bank and we see it as a clear endorsement of the company’s governance and the quality of the Sarytogan graphite project,” said Sarytogan Managing Director Sean Gregory, according to the Australian Securities Exchange announcement.
The pre-feasibility study is expected to be completed by September.
Graphite, critical raw material: use and application
Graphite, a soft form of carbon, is an important raw material. The European Union has included graphite in its fifth list of critical raw materials (CRM).
Graphite occurs naturally in metamorphic rocks such as marble, slate and gneiss. It has both metallic and non-metallic properties, making it ideal for various industrial applications.
One of its most significant applications is the production of lithium-ion batteries that power electric vehicles and portable electronic devices.
As the world increasingly switches to renewable energy and electric vehicles, demand for graphite is increasing. According to Benchmark Mineral Intelligence, graphite consumption in the global battery market has increased by 200% since 2019.
In addition to batteries, graphite is also indispensable in high-tech industries and metallurgical processes. To date, China is the world’s largest producer of graphite. According to the United States Geological Survey, China produced an estimated 77% of total world production in 2023.
Kazakhstan has the potential to become a major player in the global graphite market. The country, the largest economy in Central Asia, is endowed with significant natural resources, including graphite deposits. This strategically positions Kazakhstan in the global supply chain for critical raw materials.
Kazakhstan is located at the crossroads of Europe and Asia, offering strategic advantages for exporting commodities to key markets in both regions, Sarytogan Limited pointed this out in its recent presentation to investors in June.
The Kazakh government has also been proactive in attracting foreign investment in the Mining Sector that provides incentives and a supportive regulatory environment for exploration and development.
The investment is part of the EBRD’s efforts to strengthen Kazakhstan’s mining sector and its junior mining companies. It is also in line with the strategic partnership between the EU and Kazakhstan The focus is on raw materials, batteries and renewable hydrogen.
So far, the EBRD invested 10.2 billion euros (11.1 billion US dollars) in 324 projects across Kazakhstan, primarily aimed at supporting private entrepreneurship.