INTERVIEW: Graphite, titanium markets to benefit from rising defense spends: Sovereign CCO

NATO countries' recent commitments to boost defense spending to 5% of their GDP by 2035 could further boost graphite and titanium demand, according to Sovereign Metals' chief commercial officer Sapan Ghai.

Sovereign, which owns the Kasiya natural graphite and rutile mine project in Malawi, is increasingly bullish on these two critical minerals. Rutile, which is a raw material for titanium metal, is already in short supply -- particularly in the West -- while the natural graphite market is dominated by China, which has introduced export controls.

"Japan and Russia are currently the sole producers of titanium metal suitable for defense and aerospace uses, for which the market has traditionally been growing 3% a year," Sovereign CCO Sapan Ghai told Platts, part of S&P Global Commodity Insights, in an interview.

"But between 2023 and 2024 defense spending grew 7% to almost $2.5 trillion."

"We've seen a massive uptake in titanium in aerospace: titanium doesn't corrode, it's as strong as steel but 40% lighter and twice as strong as aluminum," Ghai said, adding that demand from the defense sector was set to grow further.

He said airplane manufacturers Boeing and Airbus had a 14-year backlog for aircraft orders, partly due to insufficient titanium availability.

Ghai forecast prices for rutile containing 95% or higher titanium concentrate to rise from the current $1,600/mt.

"Rutile is hugely scarce, mine production has been in decline for 20 years," he said.

The last major rutile deposit discovery, in Sierra Leone, entered production in the 1960s and was running out of resources, with global output of high-grade material dropping from 750,000 mt in 2017 to around 400,000 mt/year presently, according to Australia-based minerals consultancy TZMI.

Meanwhile, the graphite market has tightened amid China's export controls, Ghai noted.

He said market volatility had favored Sovereign's graphite sales for industrial uses, such as refractory material, where it could command prices of $1,200/mt, rather than for anodes for lithium-ion batteries, where prices were around $450/mt in China.

Platts assessed natural flake graphite at $400/mt FOB China July 3, steady from the start of 2025.

Talks with potential offtakers for Kasiya's graphite were underway, he added.

Project targets

Kasiya was permitted in 2024 and mined and produced material at pilot plant level.

In a first phase starting around 2029, Sovereign plans to produce 115,000 mt/year of natural graphite in the form of 96% graphite concentrate via gravity separation and flotation.

S&P Global Market Intelligence puts global demand for natural graphite at 1.6 million mt/year, of which China accounts for 1.2 million mt/year.

Kasiya would also produce 120,000 mt/year of rutile containing 96% titanium dioxide concentrate in Phase 1, with Sovereign putting overall first phase investment at $665 million.

Output would expand in the fifth year of operation to 265,000 mt/year of 96% graphite concentrate and 246,000 mt/year of rutile in a further $400 million investment, over a 25-year mine life, which could be expanded, Ghai said.

Kasiya's estimated production cost of graphite as a byproduct of rutile, at $241/mt FOB, was competitive compared to China's average $257/mt FOB, making Kasiya the only graphite project globally that could compete with China, he said.

Rio Tinto, a major producer of titanium slag, has invested A$60 million ($39.49 million) in Sovereign since 2023, in which it holds an 18.5% stake.

Sovereign aims to complete a definitive feasibility study by end-2025, after which Rio Tinto will have six months to decide whether it will commit further and become Kasiya's operator.

Non-binding titanium dioxide offtake agreements with Japan's Mitsui and US company Chemours have been put on hold until Rio Tinto's decision.

"Kasiya is a strong project, and although Rio Tinto may decide to play a bigger role in its development, our focus is to continue to advance it," Ghai said.

Further financing could be found from debt facilities and prepaid offtake, he added.