Differential pricing, as predicted by DC.
So why are we seeing differential pricing for natural graphite?
Ford CEO Jim Farley explains:
“While all the trillions of profitability were taken out of China by the western OEMs, they were busy thinking about their industry strategically and they bet on electrification about ten years ago. And now they make 70% of all EVs in the world. They own all the battery processing. You want graphite … to put in a battery? You need to go to China.
We have competitors who have the largest market in the world, who already dominate globally, already setting up their supply chain around the world. If we don’t make profitable EVs in the next five years, what’s the future? We’ll just shrink into North America.
We don’t have the battery IP in the US, so we went to South Korean and Japanese companies and we said,
‘We’re gonna buy your batteries, but your raw material ecosystem has to be okay with us, so we’re not only going to require you to redo your ecosystem, where you mine, where you process, but we’re going to also have governance around child labour, corruption etc.’
It’s super important for our reputation. We’re a family 120-year-old company; I’m not gonna take a risk on that.” (YouTube)
Why is Farley so concerned about ESG?
“Starting in February 2027, all new EV traction batteries … that are marketed in European Union countries will require a digital ‘passport’. The goal of the initiative is to ensure transparency and sustainability in the battery value chain, [and] reduce environmental impacts ….
It will comprehensively describe the sustainability and responsibility of the supply chain, including carbon footprint data, the working conditions for raw material extraction, [and] battery materials and components ….” (Assembly Magazine)
Farley knows that Ford must successfully transition to EVs or they will lose their ability to compete on the global market.
It isn’t just the diversification risk resulting from China’s monopoly on PSG that Farley is concerned about.
The shift to EV production introduces new ESG risks relating to the mining and processing of minerals required for EV batteries, and Farley knows that consumers will be fully aware of the origin and sustainability of the minerals used to produce the batteries in their EVs.
Alongside a ‘diversification premium’, the differential pricing also incorporates an ‘ESG premium’.
A segmented market emerges.
RNU, with its Siviour project located in a tier 1 mining jurisdiction known for high ESG standards, is poised to capitalise.
https://youtu.be/s6eq8ABvyYQ?si=ZWy37cZq3gnq1PP1
https://www.assemblymag.com/articles/98443-eu-to-enact-ev-battery-passport-in-2027
Expand
(20min delay)