Quantum Graphite Limited has secured a binding Ore Supply Agreement with Sunlands Pure Group, consolidating downstream graphite processing and refining under a 20-year exclusive partnership. The deal sets ambitious production targets and pricing safeguards, underpinning Quantum's strategy to scale purified graphite supply for battery anodes and thermal storage markets.
- Exclusive 20-year ore supply and refining agreement with Sunlands Pure Group
- Minimum annual refined graphite production target of 100kt, scaling to 500kt within 7 years
- Cost-plus pricing model with a floor price ensuring A$375 per tonne margin
- New processing facility near Uley 2 mine and refinery in Al Buraimi, Oman
- Site Management Agreement under negotiation to govern operations and logistics
Exclusive Ore Supply Agreement Consolidates Quantum’s Downstream Ambitions
Quantum Graphite Limited (ASX:QGL) has formalised a pivotal 20-year Ore Supply Agreement (OSA) with Sunlands Pure Group (SPG), granting SPG exclusive rights to process and refine all mineral output from Quantum’s Uley Mines, including the upcoming Uley 2 project. This agreement locks in a downstream structure designed to scale purified graphite production to meet rapidly growing demand in lithium-ion battery anodes and thermal energy storage sectors.
The OSA mandates a minimum monthly mineral supply sufficient to yield 100,000 tonnes per annum (ktpa) of refined graphite initially, with a target to ramp up to 500ktpa within seven years of first production. Quantum must maintain a rolling JORC-compliant Ore Reserve covering at least three years of production, ensuring supply continuity to SPG’s processing and refining operations.
Integrated Processing Facilities Span Australia and Oman
SPG’s downstream footprint includes a new concentrate processing plant near the Uley 2 mine site on South Australia’s Southern Eyre Peninsula, producing flake graphite concentrate at 96% purity. This concentrate is then shipped to SPG’s refinery in Al Buraimi, Oman, where a proprietary hydrofluoric acid (HF) leaching process upgrades purity to 99.99% graphitic carbon.
The Al Buraimi refinery benefits from a Memorandum of Understanding signed with the local Governorate, which recognises the project as a significant national initiative and supports expedited development near Oman’s key commercial port at Sohar. This international integration reflects Quantum’s commitment to building a globally competitive supply chain, leveraging SPG’s refining technology and local support.
Pricing Model and Contractual Safeguards Provide Margins and Stability
Pricing under the OSA follows a cost-plus model with a minimum floor price designed to deliver Quantum a margin around A$375 per tonne of concentrate produced by SPG, based on a USD exchange rate of 0.64. Annual price reviews cannot reduce this floor, providing Quantum with a degree of revenue certainty amid market fluctuations.
Both parties are bound exclusively to each other under the OSA for supply and processing, with SPG permitted to refine concentrate from other regional producers only if it does not impact Quantum’s contracted volumes. This exclusivity cements Quantum’s position as the sole upstream supplier feeding SPG’s downstream operations.
Site Management Agreement to Finalise Operational Details
While the OSA covers the commercial framework, Quantum and SPG are currently negotiating a Site Management Agreement (SMA) to govern shared use of the Uley mines site, including infrastructure development, waste management, and ore supply logistics. The SMA will specifically address operations at Uley 2, with provisions to renegotiate if the project expands or additional mines come online.
Quantum’s Managing Director Sal Catalano emphasised that maintaining control over the entire flake graphite supply chain is critical to meeting market demands. He highlighted the partnership with SPG and the Eyre Peninsula Graphite Hub as key enablers of commercial scalability, positioning Quantum as the exclusive feedstock supplier for the largest flake graphite supply chain in the western hemisphere.
Chairman Bruno Ruggiero noted the structure offers shareholders growth potential without significant dilution, thanks to the capital-efficient separation of mining and downstream enterprises. This approach allows tailored funding and risk profiles for each segment, enhancing resilience and scale.
Regulatory and Project Milestones Remain Key to Execution
The agreement’s production ramp-up depends on Quantum securing all necessary Australian federal and South Australian approvals and SPG completing construction of the Sunlands Eyre Peninsula Graphite Hub, which attained Commonwealth Major Project status in early 2025. This infrastructure is central to the parties’ global logistics and processing strategy.
Investors should watch for updates on the finalisation of the SMA, progress on regulatory approvals, and milestones in the construction of the Al Buraimi refinery and the Eyre Peninsula processing hub. These factors will be critical in translating the OSA’s ambitions into operational reality.
Bottom Line?
Quantum Graphite’s exclusive 20-year partnership with Sunlands Pure Group sets a robust foundation for scaling purified graphite supply, but execution hinges on regulatory approvals and infrastructure delivery.
Questions in the middle?
- How will Quantum manage the operational risks linked to the yet-to-be-finalised Site Management Agreement?
- What financing strategies will underpin the construction and expansion of the Eyre Peninsula Graphite Hub and Al Buraimi refinery?
- How might fluctuations in global graphite demand and pricing impact the cost-plus pricing floor over the long term?