GRAPHITE MARKETWHAT IS GRAPHITE?AN IMPORTANT INPUT MATERIAL FOR...

GRAPHITE MARKET

WHAT IS GRAPHITE?
AN IMPORTANT INPUT MATERIAL FOR MODERN LIFE, GRAPHITE IS ALL AROUND YOU — IT’S IN YOUR SMARTPHONE, TELEVISION, COMPUTER, TABLET, AND IN ALL LITHIUM-ION BATTERIES.

A non-metallic mineral, Graphite is one of two natural forms of carbon (the other is diamond). With the highest natural strength and stiffness of any material, graphite is an excellent conductor of heat and electricity. It is stable over a wide range of temperatures. Graphite is a highly refractory material with a high melting point (3650°C). Graphite has a high natural lubricity and is one of the lightest of all reinforcing agents. While chemically inert, Graphite also has a high resistance to corrosion.

Graphite, specifically, Coated Spherical Graphite — or ‘CSPG’ — is used to manufacture the anode in a Lithium-ion (Li-ion) battery.

GRAPHITE FACTS

“The United States has no domestic production of natural graphite, but it is consumed by roughly 90 U.S. companies. Major producers of natural graphite include China (70%), North Korea (10%), and Brazil (8%). Top-quality flake graphite will likely see an increase in demand in the coming years; meanwhile the supply looks to be steady at best, and there are concerns about potential export controls out of China.”

Graphite is a critical strategic mineral (the USA has declared graphite a supply critical mineral; the European Union declared graphite a critical raw material)

The United States currently imports 100% of all graphite consumed

Although there are ~200 graphite applications, the one with the most significant and enduring future demand is lithium-ion batteries (graphite is used to manufacture the anode in a lithium-ion battery)

Each electric car contains more than 200 pounds of coated spherical (CSPG) graphite

It takes 10 to 30 times more graphite than lithium to make a lithium-ion battery — the minimum graphite purity required is 99.95% Cg

Future graphite demand is driven primarily by the expanding lithium-ion battery markets (transportation and stationary battery markets)

Graphite’s unique properties make it the ideal anode material for lithium-ion batteries; however, clients require CSPG graphite — not traditional run-of-mine graphite

China, who controls ~75% of global graphite production, has imposed a policy of resource nationalization, including export duties, licenses and environmental restrictions on new and existing mines

Alabama Graphite Products uses proprietary purification process with advantages over Hydrofluoric Acid (HF) based process on multiple key attributes, including chemical safety, graphite purity, sustainability and environmental process cost.

DEMAND DRIVERS
THE MARKET GROWTH FOR GRAPHITE COMES FROM LITHIUM-ION BATTERIES. BATTERIES REPRESENT THE MOST SIGNIFICANT DEMAND DRIVER FOR BATTERY-GRADE (COATED SPHERICAL OR ‘CSPG’) GRAPHITE.

There are two types of CSPG graphite used in Li-ion batteries — synthetic (~USD$20,000* per tonne average selling price) and natural (~USD$8,000-$11,000** per tonne average selling price). Due to cost and performance efficiencies, many battery manufacturers are transitioning to natural graphite.

Within the lithium-ion battery market itself, there are three main market segments.

1. Transportation Batteries: to power electric vehicles; the electrification of automotive is evolving rapidly from niche to mainstream (significant forecasted growth)
2. Stationary Storage Batteries: energy storage for electrical grid, commercial and residential buildings; also referred to grid-storage batteries (exponential forecasted growth)
3. Consumer Electronics Batteries: smartphones, laptops, tablets, wearable electronics, power tools, and other battery-powered devices (moderate forecasted growth)

GRAPHITE CONSUMPTION FORECAST (2020 – 2030)

Source: Roskill – Natural & Synthetic Graphite: Outlook to 2030

ALL BATTERY MARKET SEGMENTS

GLOBAL BATTERY FORECAST BY BATTERY TYPE

Source: Roskill – Natural & Synthetic Graphite: Outlook to 2030

Given the above two projections of supply deficits and insane future increases in demand, I personally will be keeping my allocation of the demerged Graphite assets into NGX. Depending on the management of this new entity I will likely add on any weakness?
I first invested into SVM because of their Graphite assets back in 2018 and although they have consequently found their world class rutile assets I still want to continue my exposure to my original investment.
Looking forward to the future of this company as it demerges.
Not investment advice
DYOR

Sparky