IMO it is very good news although the market doesn't appear to have realised it with all the price gain disappearing.
The US market is going to need a lot of graphite for planned, under construction and in production battery plants. Given China's dominance in the spherical graphite market, that product will currently be mainly coming from China. That's ok for the IRA in 2023. When the country of concern provisions of the IRA around import sourcing kick in, its not.
A lot of graphite processing capacity is going to need to be built if those US$7,500/vehicle discounts are going to keep on rolling. This credit is large enough that you are going to need to collect it if you are going to be price competitive with other EV producers (assuming at least one big supplier creates a compliant supply chain).
The choices for these battery plants are then:
- Use petroleum Coke, coal-tar pitch or oil to make synthetic graphite
- Import graphite and use existing purification processes involving harsh chemicals like hydrochloric acid
- Import graphite and use processes like what EGR has just got a patent over
- Import graphite and use other processes that avoid hydrochloric acid but are compliant with EGR's patent (and don't infringe on other patents)
With a US patent, there would appear to be a genuine commercial possibility for EGR to licence the process. The US market is going to need spherical graphite quantities measured in the hundreds of thousands of ton's. If future carbon emissions are priced at perhaps US$100/t then the a 7t reduction in CO2 emissions in the processing is worth paying up to $700/t to receive. There may well be takers if EGR licenced the process at prices below that. For arguments sake, if EGR could licence the processes use at even US$250/t and had a 100ktpa facility use the licence, EGR would have a passive revenue stream of US$25m/yr. The purchaser would have a lower carbon inclusive price than using alternatives.
If EGR were to do this, they wouldn't actually need to build anything to generate value warranting a share price much higher than it is currently. Doing this wouldn't stop development of Epanko. It wouldn't prevent using the process for a Kwinana development (but in the US).
(20min delay)