Smaller, lighter and more powerful than traditional batteries
Li-Ion battery demand for graphite in the next 5 to 7 years will consume more graphite than is produced in total today
Used in all types of electric vehicles with 10 - 20x more graphite than lithium used
Only flake graphite is conducive to making Li-Ion batteries
Fuel Cells
80kg of graphite is used in the average fuel cell vehicle
Fortune 500 companies are targeting fuel cell markets for non-transportation uses
Graphite Prices
Prices have almost tripled since 2005 due to:
Industrialization of BRIC (Brazil, Russia, India, China)
Strong demand from traditional steel and automotive markets
Increasing demand as China's production and exports decline
Graphite price appreciation is largely a function of the commodity super cycle and the industrialization of emerging economies as new, high growth applications are beginning to have an impact on demand and consumption
Graphite prices are also a function of flake size and purity with large flake (+80 mesh), 94% carbon varieties commanding premium pricing.
US$ per tonne (94 - 97% Carbon):
Large Flake - $2,500 - 3,000 (+80 mesh)
Medium Flake - $2,200 - 2,500 (+100-80 mesh)
Fine Flake - $2,000 - 2,400 (-100 mesh)
Graphite must still be considered an overlooked and undervalued commodity in the context of the current super cycle
Notes & Quotes
"Proton Exchange Membrane technology requires large amounts of graphite, and is the most likely technology to be developed for use in light vehicles, buildings, and smaller applications."U.S. Department of Energy
"Large-scale fuel-cell applications are being developed that could consume as much graphite as all other uses combined" - USGS, 2009
"Combined global sales of hybrid-electric vehicles (HEVs), plug-in hybrid-electric vehicles (PHEVs) and battery-electric vehicles (BEVs) will total 5.2 million units in 2020, or some 7.3% of the 70.9 million passenger vehicles forecast to be sold worldwide by that year" (estimate only) - J.D. Power Global Forecasting, 2010
"Global HEV, PHEV and BEV sales in 2010 are forecast to total 954,500 vehicles, or 2.2% of the 44.7 million vehicles projected to be sold through the end of 2010." - J.D. Power Global Forecasting, 2010
"As battery manufacturers grow with the burgeoning automotive lithium battery industry, these manufacturers will need a stable supply of raw materials. Increasingly, they are looking for graphite outside of China. Today, there is annual demand for roughly 1.1 million tonnes of natural graphite … but 960,000 tonnes of that capacity comes from China. This leaves customers largely dependent on China as a source of supply." - Byron Capital Markets, 2012
Other things that could be of interest
Valence Industries today announced an updated JORC 2012 Mineral Resource which indicated a substantially higher average grade but also materially lower tonnage. This has the impact of shortening the mine life but also decreasing the operating costs, AND INCREASING VALUATION..... We have adjusted our model to reflect the changes.
Mineral Resource: VXL has announced its updated JORC 2012 Mineral Resource indicating a substantial increase in average grade to 11.69% from 7.1% TGC (an increase of 64.6%). This brings the total resource to 3.04Mt @ 11.69% TGC for 360kt of contained graphite. The new Mineral resource includes a Measured Resource of 0.34Mt @ 17.92% TGC for 60kt of contained graphite, an Indicated Resource of 1.85Mt @ 11.84% TGC for 220kt of contained graphite and an Inferred Resource of 0.85Mt @ 8.89% TGC for 80kt of contained graphite. In addition to the in-situ resource, VXL also has stockpiles of 174kt at an average grade of 6.23% TGC. VXL has announced an exploration target for its Uley Pit 2 Extension of 9Mt – 12Mt at an average grade of 9-12% TGC.
So might be interesting to look at the broker work on the valuations.
Also learn about graphene, as this is a very interesting substance derived form graphite.
The Europeans like it...
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