Understanding graphite demand

In blabbering on on this thread all I seek to do is just to provide some research I have been doing on graphite. How it translates to MLS is dependent on MLS finding something and having the competency to exploit it. We know sentiment in MLS is not that good given CRs, increasing shares on issue and missed deadlines, but that is not the purpose of this post.

Maybe can use this thread to share interesting articles if there is a desire to do so. Just essentially providing some research I have been doing in the area for those that are interested and I certainly do not profess to be an expert in this area as I am essentially learning graphite. For the record, I am also looking at other graphite stocks to invest in, but will not disclose on here which ones.

General:

Graphite prices are a function of two factors, been flake size and purity. Large flake (+80 mesh) with high Carbon (+94%) concentrate varieties commanding premium pricing.

http://www.focusgraphite.com/technology/

Higher mesh means less microns, so the relationship between the two appears to be invesrse

https://www.espimetals.com/index.php/online-catalog/327-technical-data/stainless-steel/334-understanding-mesh-sizes

Quality and Price:

The key graphite product type for naturally occurring graphite is flake, which is what most producers use to produce a 94% (carbon) graphite concentrate. The key for naturally occurring graphite flake is the costs involved in converting graphite concentrate, which is what miners sell, to spherical graphite which is what makes its way, through conversion, to the anodes in lithium ion EV batteries (when compared to synthetic graphite). . Note: graphite is the anode in lithium ion batteries.

http://www.focusgraphite.com/technology/

For naturally occurring graphite flake, it is obvious that larger graphite flakes attract a premium price. The table below comes from the following link – page 12:

https://renascor.com.au/wp-content/uploads/2019/05/190503-Optimised-Development-Plan-for-the-Siviour-Graphite-Project.pdf

The prices above match those essentially match those provided by Focus Graphite in their website– see

http://www.focusgraphite.com/technology/

Chemical composition

On a chemical basis graphite is essentially carbon, but there are differences.

http://www.differencebetween.net/science/chemistry-science/difference-between-graphite-and-carbon/

Graphite is also the only non-metal that can conduct electricity.

http://www.ssc.education.ed.ac.uk/bsl/chemistry/graphited.html

In terms of molecular weight, I haven’t got my head around just yet the atomic weight of graphite and how it conducts electricity but theoretically the atomic weight of carbon is 12.01, but because I can’t work out the difference can’t relate back to the Faraday unit of charge and how much electricity is produced (and hence kg need of graphite in the battery anode per kWh, hence relying on industry observations to understand graphite shortfalls, albeit I generally like doing my own equation – discussed further below). So far I am getting to 50% to 70% of the calcs by industry so obviously I think I am having issues around the conversions and probably because need to understand the differencs in carbon and how graphite conducts a charge etc etc which I need to drink more VB to work it out LOL). Was able to work it out for lithium, but struggling with graphite, so that is life.

https://www.qmul.ac.uk/sbcs/iupac/AtWt/

Spherical Graphite -naturalversus synthetic

The use of higher purity feedstock to make spherical graphite reduces the cost of chemical and or heat treatment to raise the purity to above 99.9 per cent, which is needed for batteries grade.

http://australianminingreview.com.au/commodity-focus-graphite/

The below in italics is from the link just below and is a key IMO in understanding the issues surrounding cost competitive around natural graphite flake been converted to spherical graphite compared to synthetic graphite. (Note: I am taking selective paragraphs from the link itself, and the reason it is in italics is because it is a direct quote). As these issues, particularly recovery rates, are addressed the future for naturally occurring graphite flake to be the graphite of choice for meeting the needs of the EV market will further improve IMO–

http://www.northerngraphite.com/_resources/media/SPG-Summary-2.pdf

“”””””””””””””””””””””””””””Sphericalgraphite is manufactured from flake graphite concentrates produced by graphitemines and is the anode material used in lithium ion batteries (“LiBs”). SPG canbe sold as either a coated (“cSPG”) or uncoated (“uSPG”) product. Uncoated SPGis made by micronizing, rounding and purifying flake graphite.

Historically, three tonnes of flakegraphite concentrate were required to produce one tonne of uSPG due to lossesduring the initial micronizing and rounding stages and this represents themajor cost. Industry yields have improved to 40-‐50% …………………………… and thelarger the flake size the higher the yield.

The flakes must be reduced in size toabout 40 microns, and rounded which essentially involves rolling them up like asnowball. They have also been described as a “clenched fist”or a “cabbage”structure. The final size varies between 5 and 20 microns depending on theapplication. A human hair is about 45 microns. The round shape is necessary forthem to be spread thinly and uniformly during the high speed manufacturingprocess. The round shape also results in a higher density in the battery,better rate capacity and longer life. For these reasons, micronized, “unroundedflakes” are not used in batteries. The micronized and rounded material is thenpurified from approximately 94%C to99.95%C using hydrofluoric and sulphuricacid as impurities affect battery performance. On its own, wet chemicalpurification is a low cost process but large quantities of fresh water arerequired to rinse the graphite. Costs increase if neutralizing agents are addedand proper environmental and health and safety practices are followed. This isone of the reasons almost all uSPG is produced in China.

Coating is the final stage inproducing SPG. Itis not one simple step. cSPG for common batteries in smalldevices is made by coating the spheres with a pitch or asphalt substance andbaking it at over 1,200OC.The coating is essentially a hard carbon shell whichprotects the sphere from exfoliation and inhibits the ongoing reaction of theelectrolyte with the graphite which reduces battery capacity and life. ………………………...Anode material made with natural graphite has a higher capacity and is lessexpensive than synthetic graphite. Becausebattery life is much more important in an EV than it is in a cell phone forexample, EV batteries have been made from synthetic graphite which costs from$10,000 to $20,000/t.

More recently, three companies (LG,Hitachi and Samsung) have developed the technology to control expansion andextend the cycle life of natural cSPG to meet the rigid requirements of the EVmarket. This has enabled them to blend natural and synthetic graphite totake advantage of the strengths of each and to manufacture lower cost, longlife, high capacity EV batteries. The recipes are a closely guarded secret butit is generally believed that their EV batteries are 40 to 60% natural graphiteand that the ratio will increase as natural cSPG manufacturing processesimprove..””””””””””””””””

Economic resources

Because China has a lot of low quality graphite resources, in effect flake deposits which could end up been mined, assuming they have sufficient resources, IMO need to grade at least 7% -9% carbon.

Post #: 34546638

Post #: 38244529

How much graphite is in alithium ion battery

https://batteryuniversity.com/learn/article/bu_309_graphite

At the end of the day it depends on the batteryitself and the mix of synthetic graphite to natural graphite, the latterproduced from graphite flake)

https://leadingedgematerials.com/graphite/

According to this link below there is 635 gramsof embedded graphite per kWh in the anode (i.e 54 kg graphite/85 kWh Teslabattery).

https://electrek.co/2016/11/01/breakdown-raw-materials-tesla-batteries-possible-bottleneck/

This article also talks about most batteriesrequiring up to 70 kg of graphite, suggesting battery sizes of 45 kWh.

http://www.northerngraphite.com/about-graphite/graphite-growth-markets/lithium-ion-batteries/

So essentially, how much spherical graphite is produced from naturally occuring flake graphite (I presume 94% C) concentrate is dependent on the assumption of synthetic to natural occurring graphite in the battery anode, within lithium ion batteries. As a general rule, it is generally assumed that 2kg to 3kg of graphite flake concentrate (94%) is required for each 1 kWh of graphite in the anode sourced from spherical graphite, assuming 50% of the anode comes from naturally occurring graphite and the remainder is synthetic graphite.

Slide 16 and 17 of this link shows this:

www.syrahresources.com.au/investors/downloads/560

Slide 16 is also duplicated in this presentation below – the relationship is essentially that 1 kWh of battery capacity requires 1 kg of sphericalgraphite/synthetic graphite depending on the mix of input the two in the graphite based anode of lithium ion batteries. Given that two to three units of naturally occurring flake is required to produce 1 unit of spherical graphite, this where the numbers come from.

http://www.sydneyminingclub.org/wp-content/uploads/syrah.pdf

Working out the numbers, I suspect, based on theabove, an assumption that 50% of anode material is based on sphericalgraphite using graphite flake concentrate (i.e. the other 50% coming fromsynthetic graphite) then you get the figures in the right hand columnessentially.

Demandoutlook

Currently the majority of natural graphite isused in steel, but over time is expected to move to EVs and battery storage. Giventhe demand projections for EVs there will be a need for significant increase ingraphite and new mines, and as natural graphite improves its efficiency inbatteries (i.e. achieves longer life) then the product mix in graphitebatteries between sphericalgraphite (based on graphite flake) and synthetic graphite will furtherincrease. Forecasts are always difficult to showbut these are some that are around in this link – in any event I won’t get intoforecasts of EV vehicles here because I did this in another stock I own where Ideal with EV demand, refer this post for some figures Post #: 37817451 and this one Post #: 37866312. Just for yourselves, in 2017 1 million passenger vehicles EVs were produced (not the word passenger) increasing to 2 million in 2018 and forecasts range up to 15 million to 22 million passenger EVs produced in 2025, obviously meaning increased graphite demand (as well as lithium demand).

Obviously the graphite forecasts are really sayingthat the traditional supply of graphite into the steel market will be overtakenby the needs of EVs.

Essentially the below links supports the view aswell of graphite needs:

http://australianminingreview.com.au/commodity-focus-graphite/

https://www.batteryminerals.com/our-business/spherical-graphite-process/

https://www.benchmarkminerals.com/graphite-demand-from-lithium-ion-batteries-to-more-than-treble-in-4-years/

Ultimately demand as it flows through to minersof graphite flake is about costs, grade and the production of sphericalgraphite from graphite flake concentrate (as against synthetic graphite), andthe change in that mix in the graphite anode makeup in lithium ion batteries.

- http://www.indmin.com/downloads/tesla.pdf

All IMO IMO IMO