Global Natural Graphite Production and Syrahs Part...

Global Natural Graphite Production and Syrahs Part Therein.

What's been happening in the graphite world since I last posted about 3 months ago? Not a lot it seems but the little that has happened hasn’t been pretty.

US Geological Survey just came out with their report on World Natural Graphite Production for 2023 (https://pubs.usgs.gov/periodicals/mcs2024/mcs2024-graphite.pdf)

I loaded the details into a spreadsheet to see what it all means.

In summary :

So, a few takeaways :-

• The Usgs figures are only estimates but probably the best currently available, they are published every January and are then revised the following year. The figures for 2022 are very different to what they published a year ago so the 2023 figures are probably suspect especially for China production.

• Syrah is the only company ex China mainly producing for the battery anode market, every other producer is mainly producing large flake for the industrial market.

• There is no shortage of unused capacity both for small and large flake production but of course different specification requirements do not neatly match up supply with demand.

• Total annual production of natural graphite worldwide has only increased by 45% in 10 years and has possibly decreased in the last year.

• China has been steadily increasing its share of world production

However this analysis doesn’t include two important factors - Market segmentation and the effect of synthetic production on the market.

Market Segmentation.

Historically Shandong Province was the prevalent producing area in China, being the main source of large flake graphite. Over the years ore reserves in Shandong have been depleted and China can no longer produce enough, specially of extra large flake, for it’s own needs. To partially compensate for this in 2016 they bought a small mine with a large resource in Madagascar and have been steadily expanding production there.

Worldwide, graphite for industrial uses still accounts for more than 50% of the total market for natural graphite. Large flake commands the highest pricing, demand is steadily growing, it can be sold to countries other than China, pricing has remained steady and the few new mines beng constructed ex China (e.g. Walkabout Resources Lindi Jumbo mine in Madagascar) are directed at this segment of the market.

Chinese production has transitioned to Jixi/Mishan and Luo Bei counties in Heilongjiang Province mainly producing small flake for the battery anode market. Several large mines have come on stream in Heilongjiang in the last year resulting (hopefully temporarily) in an overcapacity and reducing prices. This is the market that Syrah is locked into at the moment and the reason they are not currently making much headway.

Synthetic Graphite

This product has been produced for many years but it seems that only in the last few years has it been widely realized how much capacity has come online and how it is going to influence the total graphite market. While a few producers in the west (Novonix and Anovion in USA and Vianode in Norway) are attempting to get into the market their efforts pale into insignificance compared to what China is doing.

Yunnan Shanshan Graphite just opened their new 300ktpa plant. (https://news.metal.com/newscontent/102574174/)

This takes the total installed capacity for the Shanshan Group alone to 700ktpa and it is said the total Chinese production is currently 1600ktpa.

(https://www.mining.com/web/synthetic-graphite-for-ev-batteries-can-the-west-crack-chinas-code/)

This means the production capacity for synthetic now exceeds the total worldwide production of natural graphite and constitutes up to 85% of the graphite used in battery anodes.

The Western commentary is that this is unsustainable but China didn’t invest the absolutely mind blowing amounts of capital needed for this industry to fail. At the moment there is a large overcapacity, resulting competition driving down prices, it is said to below cost, and natural small flake graphite prices with it.

This scenario of course is also massively affecting Syrah and it is hard to see a resolution to the problem in the short term. Which is going to win the battle ( as far as battery anodes are concerned), synthetic or natural or are they going to coexist? It is accepted that the graphite market overall is rapidly expanding but what percentage of that market is each product going to achieve? Everyone has an opinion but noone has the definitive answer.

Disclaimer

It has been said that somewhere between 65% and 90% of everything written about graphite is misinformation and there is a definite possibility that anything I write could fall into that category. Certainly, I believe that a lot of the hype in potential graphite miners presentations is hugely optimistic and unrealistic. Everything I think I know about graphite I got off the Google but I ignore a lot of stuff that doesn’t fit into my view of things. I welcome any comments with a different outlook.