General Discussions, page-35137

Snip of DC comments

Shore up supply chain like South Korea

Renascor Resources (ASX:RNU) MD David Christensen thinks graphite’s importance as a critical mineral is definitely being undervalued at the moment.

The company’s Siviour project in South Australia has a post-tax net present value of $1.5 billion and Renascor expects it to be one of the world’s lowest cost projects, with costs of US$405/t of graphite concentrate in the first 10 years.

The company is also advancing optimisation studies and is also looking to commission a purified spherical graphite (PSG) demonstration plant later this year.

“Over the last several years, China has increased its dominance in the production and refining of graphite to the point of having monopoly control of portions of the graphite supply chain,” Christensen said.

“This means that the production of EVs in the US (or any other country) is wholly dependent on China for graphite.

“The recent trade tension highlights the need for secure supply chains for graphite to ensure the EV industry can continue to grow, notwithstanding the current trade tension.”

He reckons we should take a leaf out of South Korea’s book with POSCO, a company primarily known for its steel manufacturing, becoming increasingly involved in the EV industry. It’s been expanding and investing in that arm of the business – including cathode and anode materials, as well as producing steel for EV components.

“South Korea has been the leader outside of China in building out mid and downstream manufacturing capacity in the battery sector,” Christensen said.

“It is no surprise that POSCO is expanding its manufacturing footprint in Korea to free itself of dependence on China.

“To protect domestic manufacturing investments in the battery/EV space, I think we can expect to see similar investments outside of South Korea, including in Japan, which already has established anode producers, as well as the US and EU which have seen significant investment in battery production.”

And a scramble is already on to build anode manufacturing capacity outside China.

“Whilst the equity markets have been soft for graphite (as well as other battery minerals) in recent times, we are already seeing significant ex-China expansions by anode makers, who require graphite for their operations,” Christensen said.

“The legacy ex-China anode makers in South Korea and Japan have announced major expansions, and we are seeing some of the tier-1 Chinese anode makers make major investments in Indonesia, Malaysia and Morrocco.

“The one common theme for all of these projects is that they will need graphite sourced outside of China.”