Paul,
Your comments about Synthetic Spherical Graphite production and the need to add additional capacity when the demand starts to ramp up I believe is correct. To increase production capacity of Synthetic it will take a much longer time and higher CAPEX then to increase the production capacity of Natural Spherical graphite production.
Current China’s capacity of Natural Spherical Graphite far exceeds demand thus the Chinese can ramp up additional supply very fast when needed. The Chinese can also add new capacity within 1 year when needed. It will take a few years to add additional capacity of Synthetic Spherical Graphite
Thus any new or current Li- Lon producer will want to purchase their supply of Natural Spherical Graphite from China and fill up their existing low cost capacity. (China is an extremely low cost producer of this material)
Japan is only producing Synthetic Spherical Graphite and trying to keep their technology from the Chinese and others. This is one major reason why Synthetic is so much higher priced then Natural Spherical Graphite.
I assume the Kenmare flake will produce a equal quality to the Chinese Natural Flake Graphite currently used. We know the Kenmare has slightly lower ash (2 to3% vs. Chinese at 4 to 5%) but this small ash difference will have little effect on cost or quality. Thus it will come down to price? Which origin will be lower in cost to use to make Purified Spherical Natural Graphite Anode material.
The Kenmare flake is better suited for applications that need Jumbo and Large flakes because it floats easily to 97 to 98 % carbon. (Yes graphite flotation is mostly an Art) The issue for Kenmare and other Jr. Graphite Mining Companies that are all trying to market the higher value Jumbo and Large flake is the smaller worldwide market demand and the fact that the market demand will not grow as fast as the market demand will grow for lower cost Fine flake graphite used to make Li-Ion batteries. Yes producers of Li –Ion anodes can start out with a larger flake size and mill and shape the flakes to a powder just like starting with finer flakes sizes so the Kenmare and others Jumbo and Large flake graphite’s can still be used to make Li-Ion battery anode material. The only issue is then cost. Do the Jr. Graphite Mining companies want to sell their jumbo and large flake at close to the same selling prices as Chinese and other graphite companies that sell fine flake or do they prefer to mine less volume and only sell to markets that must use Jumbo and Large Flake and thus not build these mega graphite mines.
How interested in an investor in a small capacity Jumbo and Large graphite mine that produces only 10 to 15,000/mt per year capacity? My bet is most investors are not interested since the business is too small. Let me know what you and others think about this?
All or most of the future Graphite demand growth is going to come from Fine Flakes and not Jumbo and Large flakes. (I know not all investors believe this and this is one major issue the graphite industry has today. Graphite investors do not really understand well or think about what will happen if there is a major surplus of supply to Jumbo and large flakes)
I welcome yours others comments
