Mission Critical: Graphite One and Nikolai Nickel - Alaska Business Magazine

by Amy Newman | Nov 4, 2024 | Magazine, Mining

Photo Credit: George Case | US Geological Survey

The Electric Eighteen” sounds like an electronic music group going viral on TikTok. In reality, it’s what the US Department of Energy calls eighteen minerals deemed critical for energy technology. A mineral is considered “critical” if it is at high risk for supply chain disruption and deemed essential to one or more energy technologies.

Graphite and nickel are part of that group. Each has a variety of commercial and industrial applications. Graphite is a key component in laptop computers, smartphones, drones, energy storage devices, and nuclear reactors, while nickel is used to manufacture stainless steel, turbine blades, and jet engine parts. More recently, demand for the minerals has been driven by their use in the lithium-ion batteries that power electric vehicles; by weight, graphite and nickel are the first- and third-largest mineral components of these batteries.

Despite their importance, the United States has no domestic source for these minerals. It has imported 100 percent of its graphite since the ‘50s and, when Eagle Mine in Michigan, the country’s only active nickel mine, ceases operations in 2025, nickel will be 100 percent imported too.

Canadian companies Graphite One and Alaska Energy Metals (AEM) believe that the solution to reducing dependence on imported minerals lies in underground deposits in Alaska, and both are making progress toward bringing those minerals to market. Both companies hope to not only decrease dependence on overseas sources of critical minerals but to support the energy transition as well.

“We really should be working harder to increase our domestic resources and secure a domestic supply chain,” says Greg Beischer, president, CEO, and director of AEM, which is exploring a nickel deposit in the Interior.

“It’s not just nickel. There is copper, cobalt, platinum, and palladium in the deposit. So, you know, it does really contain multiple critical and strategic metals.”

—Greg Beischer, President, CEO, and Director, Alaska Energy Metals

AEM acquired the rights to the roughly 23,000-acre Nikolai deposit, located almost 25 miles northwest of Paxson in the southern foothills of the Alaska Range, in 2020. Beischer says the Nikolai Project is still in the exploration phase and has another year or two until it can be considered a “development project.” But he’s banking on it becoming a productive source of homegrown nickel, even if a working mine realistically wouldn’t come online for another decade.

Last fall, Beischer said, “It’s a prospect that I think within a short period of time I will be able to call an actual deposit.” He even hoped to call it a “great big deposit.”

A year later, Nikolai is on its way to becoming, if not yet a great big deposit, then one that was larger than AEM initially anticipated.

“A great deal has happened since last September,” he says. “As a result of the drilling we did in summer 2023, along with the historical information for the project that we had purchased, we were able to calculate a mineral resource estimate that was really quite substantial—in fact, bigger than we had really imagined would be possible.”

AEM’s initial estimates were for a total resource of “maybe” 3 billion pounds of nickel, Beischer says. It has now grown to an indicated resource of 3.9 billion pounds and 4.2 billion pounds in inferred resources.

“That was a pleasant surprise,” he says. “And it’s not just nickel. There is copper, cobalt, platinum, and palladium in the deposit. So, you know, it does really contain multiple critical and strategic metals.”

Beischer is quick to point out that the revised estimate “does not speak at all to the recovery of those metals. We’ve started doing the initial bench scale work, but we know for certain that you’re not going to recover 100 percent; it may be only 50 or 55 percent of the metal that’s actually recovered.”

AEM began its 2024 drilling season in July and, at roughly 4,000 meters, was the same scope as its 2023 season. Though Beischer believes the project deserved a budget that would have allowed for drilling an area three to four times larger, the market price of nickel has dropped in the last year.

“It’s gone down with the flooding of nickel into the market from Indonesia and, in particular, with a lot of Chinese-backed new operations,” he says. “So that’s served to depress the price of nickel, which in turn served to limit our share price and therefore limit our ability to raise the amount of money we’d need to expand the program to what was warranted.”

Despite the inability to expand the drilling program, Beischer says the project “continues apace.” AEM continues to collect data for its baseline environmental studies and hopes to have at least a preliminary economic assessment, if not the pre-feasibility study, completed by the end of 2025.

“The financial piece is immediately helpful, but the long-term partnership this [BSNC] agreement established will be just as, if not more, important for the success of the project.”

—Anthony Huston, Founder and CEOGraphite One

Graphite One completed its pre-feasibility study in 2022 and is on track to finish a feasibility study by the end of this year. A $37.5 million US Department of Defense (DOD) grant awarded in 2023 enabled Graphite One to quadruple its drilling program, which revealed a graphite deposit that was larger than earlier estimates.

“In the feasibility study, we are analyzing a project that would produce an average of 183,000 tonnes per year of graphite concentrate over a twenty-two-year mine life, which is larger than what was looked at in our 2022 pre-feasibility study,” says Graphite One founder and CEO Anthony Huston.

That 2022 study estimated annual production between 100,000 and 150,000 tonnes. The larger estimated output is fortuitous, as it coincides with an ever-growing need for a homegrown source of graphite.

“The US graphite market has been pressured with export restrictions from China, [which] has led to an increased need for domestic graphite production for markets such as US defense and alternative energy,” Huston says.

Graphite Creek lies 37 miles north of Nome, on the northern flank of the Kigluaik Mountains. The US Geological Survey has identified it as the site of the largest flake graphite resource in the United States—and one of the largest in the world.

Field work and core samples from the 2023 drilling season to gather information for the Graphite Creek mine feasbility study.

Photo Credit: Graphite One

Huston acquired the rights to the deposit in 2012 when he purchased and leased 176 state mining claims from the descendants of Nicholas and Evinda Tweet, a Minnesota couple who came to Nome looking for gold in 1899. Huston says the company is moving “full-steam ahead” on advanced exploration work at the site, which encompasses 26,680 acres, and completing a feasibility study.

“We are working every day to make progress on Graphite Creek,” he says. “If the feasibility study comes back as we expect and hope, we should be on track for construction in the not-too-distant future.”

In addition to the Graphite Creek mine, Graphite One is proceeding with plans to build an advanced graphite materials facility and battery anode material manufacturing plant in Ohio, the second link in its domestic supply chain. In March it selected a brownfield facility in Niles, Ohio, part of a burgeoning EV manufacturing region around Youngstown dubbed “Voltage Valley.”

Ohio is a pivot from initial plans to locate the facilities in Washington state. Huston says Washington remains an option for a second facility, but not until the Ohio plant is operational. The choice to locate the facilities in Niles was also serendipitous—the US government once used the site to stockpile critical minerals for national defense.

“Once Graphite Greek is in production, this will eventually help make Graphite One a fully integrated supplier of both high-quality natural flake graphite and synthetic graphite, both of which are critical for modern energy systems and many other advanced technologies, such as those in defense applications,” Huston says.

For the Nikolai project, AEM is applying for a DOD grant similar to the one awarded to Graphite One, which would help the company speed up its exploration and development timeline. Beischer says a decision on whether to advance to phase 2 of the grant process is expected in early 2025.

The Nikolai Project is still too early in the development phase to have secured any partnerships or investors outside of its shareholders, but Beischer says it is in the process of soliciting interest.

“There are no local big investors or any notable company or major funder,” he says. “It’s a little early. Typically, you’re going to want to see a bit more advancement, like you’ve done at least a preliminary economic assessment, before they’d be putting in bigger dollars. Ultimately, we want a strategic partner that can help with the heavier financial interest but also bring expertise that we might not have in-house.”

Beischer says the revised estimates help make the project more attractive to potential strategic investors and could potentially draw small “placeholder investments.”

Graphite One has had more success securing outside financial backing and strategic partners. A second, $4.7 million DOD grant will allow it to develop a graphite foam fire suppressant system. In August 2023, it received a stamp of approval from the Bering Straits Native Corporation (BSNC) board of directors, who voted unanimously to support the Graphite Creek project with an initial $2 million investment, with an option to invest up to $8 million more.

“We are a company focused on helping provide the advanced graphite materials our society needs to move to a cleaner energy future with a secure, domestic supply of high-quality flake graphite.”

—Anthony Huston, Founder and CEO Graphite One

“BSNC’s investment in Graphite One was made after years of observing their work to advance a project that could provide generational economic opportunities in a diligent, thoughtful manner that is inclusive of all,” says BSNC’s Director of External Affairs and Public Relations Marleanna Hall. “We appreciate Graphite One’s continual work to involve nearby communities in the project through local employment and community meetings. BSNC remains pleased with our investment, and we are eager to work alongside Graphite One on a project to develop a critical resource and provide benefits to our region, state, and country.”

Huston says BSNC’s vocal support of the project is just as important as its financial investment.

“The financial piece is immediately helpful, but the long-term partnership this agreement established will be just as, if not more, important for the success of the project,” he says. “Not only does having such influential local support show the world that we are striving to put together Graphite Creek thoughtfully, responsibly, and with the input of nearby communities, but the partnership also gives BSNC and its shareholders an even more direct line of input into how we move forward on the project.”

In July, Graphite One announced at a briefing held at the US Capitol that it had entered a non-binding supply agreement for the sale of anode active materials Lucid Group, maker of the Lucid Air sedan, the longest-range EV on the market.

“We are committed to accelerating the transition to sustainable vehicles, and the development of a robust domestic supply chain ensures the United States, and Lucid, will maintain technology leadership in this global race,” Lucid’s CEO and Chief Technology Officer Peter Rawlinson said when the agreement was announced. “Through work with partners like Graphite One, we will have access to American-sourced critical raw materials, helping power our award-winning vehicles made with pride in Arizona.”

“The financial piece is immediately helpful, but the long-term partnership this [BSNC] agreement established will be just as, if not more, important for the success of the project.”

—Anthony Huston, Founder and CEOGraphite One

Photo Credit: Graphite One

While Graphite One and AEM continue to develop their projects and secure additional funding and partners, Huston and Beischer both say their companies are focused on more than simply extracting minerals—they want to bolster the United States self-sufficiency in the critical minerals market and help work toward cleaner energy solutions.

“Graphite Creek is far more than a mining project, and Graphite One is not just a junior mining company,” Huston says. “We are a company focused on helping provide the advanced graphite materials our society needs to move to a cleaner energy future with a secure, domestic supply of high-quality flake graphite.”

Same goes for nickel. “There are moves afoot to try and source responsible metals,” Beischer adds. “That’s why it makes so much sense to have the Nikolai Project here on US soil, where you have the highest environmental standards.”

“As a result of the drilling we did in summer 2023, along with the historical information for the project that we had purchased, we were able to calculate a mineral resource estimate that was really quite substantial—in fact, bigger than we had really imagined would be possible.”

—Greg Beischer, President, CEO, and Director, Alaska Energy Metals

Oct 21, 2024 | Magazine, Tourism

Arctic Hive in Wiseman and Tutka Bay Lodge on the Kenai Peninsula are bracing for the “Oprah Effect” thanks to national recognition for out-of-the way destinations.

Oct 15, 2024 | Environmental, Mining, News

Improvements in appliance crushing maximized the capacity of the annual removal of electronic and hazardous waste from six villages near the Donlin Gold development.

Oct 15, 2024 | Guest Author, Magazine, Professional Services

While emergency planning may seem daunting, small businesses often benefit the most from such preparation. Guest author Daniel Hoffman of Hoffman Consulting itemizes the steps to take.