FUTURE POTENTIAL, page-957

Another good article out of America, on the need for graphite landed on my desk this morning.

This is why it's so important that Trevor is able to establish relationships with American companies. I have no doubt this would have been one of the reasons he chose America to visit which he is currently doing now. Huge market with huge potential.

The $3-trillion EV market needs batteries that are 20-30% graphite–a material the U.S. currently doesn’t produce at all.

Considering that there is more graphite in an EV battery than there is lithium, we’re anticipating a major demand surge for this “supply critical mineral”.

Each EV battery requires not only lithium–a metal that investors are very interested in–but even more graphite, the metal that prevents the lithium batteries from breaking down.

Yet, the U.S. hasn’t produced any graphite for decades.

Now, with the EV market starting to explode, and automakers and battery manufacturers expected to consume far more than ever, we’re looking at a nightmarish graphite supply chain that is mostly dependent on China–but not necessarily on the Chinese.

Both the United States and the European Union have now declared graphite a “supply critical mineral”.

Over 70% of all graphite is produced in China. And even that output may be uncertain as gigafactory demand dictates a supply crunch. China remains dominant and even got a boost from the COVID-19 pandemic, which saw it very quickly recover from production facility closures, ensuring that the supply chain did not see any real diversification.

The math looks simple. With the majority of the graphite mined in the world coming out of China, and all anodes in EV batteries or energy storage components requiring graphite, whoever is manufacturing around the world has to utilize this material.

Most of these battery manufacturers are Asian, so whether they are made in Korea or Japan, much of the graphite originates or is processed in China. From there, it either gets further processed in China or it moves to South Korea or Japan for Panasonic or LG, for instance, which make certain parts of the battery.

American EV sales are expected to come in at 450,000 for 2021. Year-to-date sales through November were up 88% compared to 2020, and the New Year is gearing up for an even bigger surge as new models flood the marketplace. AutoPacific forecasts EV sales at 650,000 next year, for another 45% increase.

That makes graphite a matter of national security in the global energy race.

Excerpts taken from Tom Kool.