This is well worth reading.. it describes graphite's increasing...

This is well worth reading.. it describes graphite's increasing value...tried to post the link but was disallowed so here is a full text cut and paste...

'Researchers at West Virginia University estimate that 500 new 100 GW pebble reactors will be installed in the US by 2020 with an estimated graphite requirement of 400,000 tonnes. This alone is equal to the world�s current annual production of flake graphite without taking into account PBMR demand from the rest of the world, growing industrial demand and growing demand from other applications such as Li ion batteries."

"In fact, there is 20 times more graphite than lithium, in a lithium ion battery"


What is Graphite?

Graphite and diamonds are the only two naturally formed polymers of carbon. Graphite is essentially a two dimensional, planar crystal structure whereas diamonds are a three dimensional structure. Graphite is an excellent conductor of heat and electricity and has the highest natural strength and stiffness of any material. It maintains its strength and stability to temperatures in excess of 3,600�C and is very resistant to chemical attack. At the same time it is one of the lightest of all reinforcing agents and has high natural lubricity.

Graphite Uses
What is graphite used for?

Traditional demand for graphite is largely tied to the steel industry where it is used as a liner for ladles and crucibles, as a component in bricks which line furnaces (�refractories�), and as an agent to increase the carbon content of steel. In the automotive industry it is used in brake linings, gaskets and clutch materials. Graphite also has a myriad of other uses in batteries, lubricants, fire retardants, and reinforcements in plastics.

Industrial demand for graphite has been growing at about 5 per cent per annum for most of this decade due to the ongoing industrialization on China, India and other emerging economies. However, the �blue sky� for the graphite industry is the incremental demand that will be created by a number of green initiatives including Li ion batteries, fuel cells, solar energy, semi conductors, and nuclear energy. Many of these applications have the potential to consume more graphite that all current uses combined.

The market for graphite exceeds one million tonnes per year (�Mtpy�) of which 60% is amorphous and 40% flake. Only flake graphite which can be upgraded to 99.9% purity is suitable for making Li ion batteries. The graphite market is almost as large as the nickel market (1.3 Mtpy), far larger than the markets for magnesium (429 Mtpy), molybdenum (180 Mtpy) or tungsten (55 Mtpy), and more than 50 times the size of the lithium or rare earth markets.

Graphite Price
How is graphite priced?

Like uranium, there is a posted price for graphite which provides a guideline with respect to longer term trends but transactions are largely based on direct negotiations between the buyer and seller. Graphite prices are also a function of flake size and purity with large flake (+80 mesh), 94% carbon varieties commanding premium pricing. Prices exceeded US$1,300/t in the late 80s but crashed to US$600-750t in the 90s as Chinese producers dumped product on the market. During this period there was essentially no exploration and as a result there are very few projects in the development pipeline.

Graphite prices did not start to recover until 2005 and have surpassed US$1,300/t with premium product rumored to be selling at close to $2,000/t as the supply of large flake, high carbon graphite is tight. Price appreciation is largely a function of the commodity super cycle and the industrialization of emerging economies as new, high growth applications such as Li ion batteries have not yet had a substatial impact on demand and consumption. Graphite prices have still not yet experienced anywhere near the price appreciation of other commodities and graphite must still be considered an overlooked and undervalued commodity in the context of the current super cycle.

Graphite Growth Potential
The China Syndrome

China produces over 80 per of the world�s graphite supply. Approximately 70% of Chinese production is fine or amorphous graphite while 30% is flake. China does produce some large flake graphite but the majority of its flake graphite production is very small in the +200 mesh range.

China was responsible for the large decline in graphite prices in the 90s as a substantial amount of product was dumped on the market. This is unlikely to be repeated due to the phenomenal growth in the Chinese domestic steel industry which internally consumes a great deal of graphite. Furthermore, Chinese graphite is declining in quality and costs are increasing due to the effects of high grading and to tightening labor and environmental standards.

The majority of Chinese graphite mines are small and many are seasonal. Easily mined surface oxide deposits are being depleted and mining is now moving into deeper and higher cost deposits. China now has a 20% export duty on graphite, as well as a 17% VAT, and has instituted an export licensing system. This is creating serious supply concerns for the rest of the world. The situation is being exacerbated by declining production and the impending closure of the only North American mine.

Graphite in Lithium Ion Batteries

Li ion batteries are smaller, lighter and more powerful than traditional batteries. They also have no memory effect and a very low rate of discharge when not in use. As a result, most portable consumer devices such as laptops, cell phones, MP3 players and digital cameras use Li ion batteries and they have now moved into power tools as well. While this market is growing at x% per year, the batteries are small and the resultant demand for metal is relatively small. Graphite demand in Lithium ion batteries was estimated at 44,000 tonnes in 2008 or about 10 per cent of the flake market.

However, Li ion batteries are now being used in hybrid electric vehicles (�HEV�), plug in electric vehicles (�PEV�) and all electric vehicles (�EV�) where the batteries are large and the potential demand for graphite huge. While this has created a great deal of excitement in the lithium industry, the investment community is only now beginning to focus on other materials used in Li ion batteries and by weight, graphite is the second largest component. In fact, there is 20 times more graphite than lithium, in a lithium ion battery. Graphite is in a much stronger position than lithium carbonate as it is the anode material of choice for most battery designs. The anode requires a porous carbon material and graphite is the optimum suitor.

There is xxkg or graphite in the average HEV and xx kgs in an EV. Obama�s target is to have one million EVs on the road in the US alone by 2015 which represents a potential x per cent increase in flake graphite demand. In a recent research report Canaccord estimated that incremental Li carbonate demand from Li ion batteries will reach 286,000 tonnes by 2020. That will require a 12 fold increase in annual flake graphite production to provide material for that many batteries.

Only flake graphite which can be upgraded to 99.9% purity can be used to make the �spherical� or �potato� shaped graphite used in Li ion batteries. The process is expensive and wastes 70% of the feedstock flake graphite. As a result, spherical graphite currently sells for between $3-4,000/tonne or three times the price of high quality flake graphite.

Almost all Li ion battery manufacturing currently takes place in Asia. However, it has become a very big priority for the Obama administration due to the decline in the US domestic car industry. The recent congressional stimulus bill includes tens of billions of dollars in loans, grants, and tax incentives for battery and HEV research and manufacture to jump-start US industry. Michigan has awarded $544M in tax credits to four Li ion battery companies with plans to invest more than $1.7 billion in manufacturing facilities. A123 Systems, which designs and manufactures Li ion batteries and systems, raised $428.3 MM in an over-subscribed IPO on NASDAQ in September 2009.

Links:

Lithium Ion Battery

Battery Electric Vehicle

Graphite in Fuel Cells

While batteries store electrical energy for subsequent use, fuel cells also generate electricity through chemical reactions and therefore need to be periodically �refueled�. Fuel cells can be used in both stationary and mobile applications and use substantially more graphite than lithium ion batteries. Fuel cells produce little or no waste products and are very quiet, eliminating noise pollution. They have no moving parts and are long lasting, low maintenance and reliable. Fuel cells are also much more efficient than combustion engines in converting fuel to energy.

According to fuelcells.org �there are many uses for fuel cells right now and all of the major automakers are working to commercialize a fuel cell car. Fuel cells are powering buses, boats, trains, planes, scooters, forklifts, even bicycles. There are fuel cell-powered vending machines, vacuum cleaners and highway road signs. Miniature fuel cells for cellular phones, laptop computers and portable electronics are on their way to market. Hospitals, credit card centers, police stations, and banks are all using fuel cells to provide emergency power to their facilities. Wastewater treatment plants and landfills are using fuel cells to convert the methane gas they produce into electricity. Telecommunications companies are installing fuel cells at cell phone, radio and 911 towers.�

According to the United States Geological Survey, fuel cells have the potential to consume as much graphite as all other uses combined. There are a number of different types of fuel cell under development although the proton exchange membrane technology (�PEM�) is the only one that uses large quantities of graphite and could create significant demand for graphite. However, the US Department of Energy suggests that PEM cells are the most likely to be developed for use in light vehicles, buildings and smaller applications. Some auto manufacturers are stating that fuel cells vehicles will be commercial by 2012 while Toyota states that �it sees a clear path to commercial production by 2015.�

Fuel Cell Design (www.scientific-computing.com)

Bi polar plates, which are a major component of fuel cells, are made from medium to coarse, high purity flake graphite.

Links:

Fuel Cell

Fuel Cell Basics

Graphite in Pebble Bed Nuclear Reactors

A Pebble Bed Nuclear Reactor (�PBMR�) is a small, modular nuclear reactor. The fuel is uranium imbedded in graphite balls the size of tennis balls. PBMRs have a number of advantages over large traditional reactors in addition to their lower capital and operating costs. First, they use an inert gases rather than water as a coolant. Therefore, they do not need the large, complex water cooling systems of conventional reactors and the inert gases do not dissolve and carry contaminants. Second, its passive safety removes the need for redundant active safety systems. In other words, a PBMR cools naturally when is shut down. Finally, PBMRs operate at higher temperatures which makes more efficient use of fuel and they can directly heat fluids for low pressure gas turbines.

The first prototype is operating in China and the country has firm plans to build 30 by 2020. China ultimately plans to build up to 300 gigawatts of reactors and PBMRs are a major part of the strategy. Small, modular reactors are also very attractive to small population centers or large and especially remote industrial applications. Companies such as Hitachi are currently working on turn key solutions. Researchers at West Virginia University estimate that 500 new 100 GW pebble reactors will be installed in the US by 2020 with an estimated graphite requirement of 400,000 tonnes. This alone is equal to the world�s current annual production of flake graphite without taking into account PBMR demand from the rest of the world, growing industrial demand and growing demand from other applications such as Li ion batteries.

It is estimated that each PBMR requires 300 tonnes of graphite at start up and 60-100 tonnes per year to operate.


Link Provided: www.northerngraphite.com/?page_id=62