The Graphite market is projected to steadily grow. Measured at $15.06 billion in 2014, it is expected to reach $17.14 billion by 2020. These projections and increased demand have been ramping up share value for graphite mining companies, making graphite an attractive investment. Additionally, China as a major supplier of graphite is expected to reduce production, raising the price of graphite. There is good reason to expect graphite mining share prices to grow in the coming years.
Thriving Demand
One of the major uses of graphite is in lithium-ion batteries. There is no doubt about the fact that we are becoming a society dependent on technology, which will surely drive up demand for batteries and therefore graphite in the next five years. Take Tesla for example. Tesla Recently announced plans to build a lithium-ion “Gigafactory” which analyst projected would increase graphite demand by 37% before the end of 2020.
This chart shows the growth of Lithium-Ion Batteries sales. Photo by: Lux Research, Inc.
Companies have already seen an increase in graphite demand during 2015. China has experienced a rise in production due to the ever-growing demand for lithium-ion batteries in China. As the middle-class of China grows, so too does the demand for graphite. This is especially pertinent because China is attempting to transition to a consumer based economy and graphite domestic demand is expected to increase. This will only add to the already rising demand for Chinese graphite; exported Chinese graphite rose from 7,000 tons in 2009 to 29,000 tons in 2014, a massive growth.
With the growth of technological integration in our society, so too comes the growth of graphite mining businesses that supply the necessary materials. Mining companies have had great luck exploring deposits in Africa and South America, and are expected to reap a profitable amount of ore in the coming years.
Future Supply
Graphite has a number of uses:
Refractories
Pencils
Batteries
Steel Forging
Automotive Parts
And these are all industries that will continue to exist over the next five years. As discussed above some of these industries will even see major growth. This can only mean that the demand for graphite will rise, but unfortunately there will be a gap between what is demanded and what can be supplied.
Smaller mining companies have been turning to the graphite industry with ambition and ardor, but like all industries many must fail for a few to succeed. There are however some promising players in the market who have found and are finding profitable reserves of quality Graphite. Companies with reliable land plots that are already extracting ore are the ones to look for. That being said, a company with solid deposits who is just getting up and running will yield strong results to the savvy investor who takes notice early on. One thing is certain, however, the graphite market will grow over the next five years, and investors who adopt early will see strong returns on their investment.
