GeroThank you for sharing this interesting article and...

Gero

Thank you for sharing this interesting article and perspective on the graphite market.

The argument proposed for the lack of price movement in graphite feedstock is too much available supply and therefore too much competition on the sell side, meaning suppliers are price takers. There is some truth in this, however my assessment of this is predatory pricing from the main supplier of active anode material: China. China is a command economy and therefore the usual market forces do not necessarily apply. This is true if the demand side of the equation does not suddenly grow, and it is forecast to grow exponentially on the back of the electrification transition of transport and the storage of electric power from renewable sources. All you have to do is consider the current embargo on any graphite sales to Sweden from China. Furthermore, China has form in this kind of market manipulation as it now dominates the supply of solar panels, where even the Koreans have given up. My assessment on China's current plan is to do the same for the supply of EVs, all you have to do is look up how many different EV models China is looking to sell overseas at super competitive prices.

Syrah has paid the price of being controlled by Chinese interests, where most if not all of its production is sold. Geopolitically the West no longer controls the natural resources of Africa, rather China does. The EU and the US have suddenly woken up to this and are actively remedying the situation so that the supply of critical raw materials for the 21st century does not dry up.

The synthetic market is deeply reliant on fossil fuel inputs, which it cannot escape as the raw material for synthetic graphite is what is left over from the petroleum refining process. The oil and gas majors are presently only too pleased to find a market for the waste residue, but it is reliant on a continued strong market for the vaste portfolio of oil and gas products from aircraft fuel, to petrol and diesel used in the land transport industry, to plastics and so on. The minute the demand for petrol and diesel starts to drop on the back of the electrification transition in land transport then the demand for the bulk of their products will fall reducing the potential supply. The energy cost of converting oil to synthetic carbon anode material input will be too great on two fronts: the price of energy required for the process and the high level of emissions inherent in that process.

Naturally, oil will still be needed for heavy diesel used in shipping and for aviation fuel, but even in these areas technology is at work to replace that oil/gas input.

As always do your own research and draw your own conclusions.

I continue to be a conviction holder in Talga, who continue to achieve major milestones on a regular basis.