why VRC is going nowhere fast....

I've been clocking VRC posts for a while and it appears to me there are some major misconceptions, not only about VRC, but the graphite space in general. What follows is, of course, my opinion and no doubt many will disagree with what I've written. It's a sort of take it or leave it post, I'll not be replying to those posters who'll label it trolling, and who are only interested in drinking the VRC cool-aid. But for those who really don't understand what's going on it's maybe a starting point for further research....

Has it not puzzled you why none of the potential graphite miners, SYR/MNS/VRC have been courted by the big end users of graphite? Look at the flagship stock SYR in recent times - a woeful performance. Oh, you're going to say that some have MOU's or offtake agreements of some sort.... yeah, some do, there will always be a place for quality graphite resources but the demand is limited. There is already enough natural graphite to meet current and near future demand many times over.

So what about the new customers everyone is fond of talking about? I mean the EV manufacturers. I haven't seen Tesla knocking on the door of any of the major miners yet, have you? I'll come to that in a moment, but for now it appears the giga factories are miles behind schedule in their plans to set up end-to-end manufacture of batteries. The idea was for them to be producing electrolyte, anodes, and cathodes for batteries but so far they ain't doing it. Looks like they'll be buying from China for some time to come.

Then there's the question of EV's themselves. Many assume they are about to take over the role of conventionally powered ICE (that's Internal combustion Engine, not crystal meth) vehicles. But once again, there's a lot of evidence that whilst punters are favourably inclined towards 'green' vehicles they don't like the price tag that comes along with them. Did I read somewhere that in 2008 EV's had 2.3% of the market and that in 2016 they have 2.8% of the market? Not exactly a boom would you say.... (check out 'tobyjack' posts in the graphite topics)

But it gets worse for those holding graphite stocks who still believe a really big player will come along eager to snap up their resources. I'm referring to whether in the long run, EV manufacturers requiring graphite anodes will be looking to use natural or synthetic graphite. It's a big issue. Indeed the entire battery technology field is fraught with danger when trying to assess future progress in the field. But I'll let that pass and assume for the immediate future the Lithium Ion battery will be the standard. So what about natural-v-synthetic graphite?

Synthetic graphite whilst being five to ten times more expensive than natural graphite (so it is said) produces superior graphite anodes. It can be produced to almost any specification and is reliable and consistent. Natural graphite cannot compete as it stands on factors such as electrochemical density and other important characteristics. This isn't a chemistry lesson so I'll leave you to research. On the other hand, natural graphite suitable for battery purposes has to be further processed before it can be used for anodes anyway (large flakes being demolished in the process) and don't tell me that doesn't cost money. With large scale manufacture, the cost of synthetic graphite would be expected to come down, so that figure of five to ten times more expensive than natural graphite I think rests on shaky ground. The current feedstock for much synthetic graphite by the way is petroleum coke, nothing to do with natural graphite at all (though any suitable carbonaceous material could be used for feedstock). I know if I were an EV manufacturer I'd want the highest quality, most reliable materials I could get for my product. IMO, it's no coincidence that Apple recently switched to synthetic graphite.

So where does all that leave us? I recently spoke by phone to Stephen Hunt about all things VRC. I'm not going to quote him directly on anything: he sounded like a reasonable guy though rather tired I thought. Personal observations aside, I came to the question of 'what did he see as the market for VRC's graphite?' He commented that that was a good question. So what was the good answer? Among the many end users he saw for graphite, such as the steel industry, composite material manufacturers and so on, EV battery manufacture didn't come particularly high in his list though it did get a mention. That's the reality. There is no imminent explosive demand that I can see awaiting natural graphite producers, or would-be graphite producers from EV battery manufacturers any time soon.

A quick word on Graphene. One of the most amazing materials ever discovered, no doubt about that. Though apart from printing inks and tennis racquets it's hard to see where it's deployed. There was some hope graphene might find its way into computer technology but silicon valley has all but given up hope for that in the near term. It's one of those amazing materials that's going to take amazing insight into how it can effectively be used. So it's pretty unlikely graphene manufacturers will be knocking on graphite miners doors begging for their product either.

Notwithstanding the above, there's nothing wrong with VRC at all. It's a potential quality graphite producer. The problem is with the graphite niche itself and there's nothing VRC can do about that. Don't take my word for it, just look at what the market is saying. You know better than the market? I wish I had a quid for every Tom, Dick, and Harry who's thought that.... and the current PFS? well, you should be able to tell by the current bidding that the effect on VRC's share price will be effectively zero. A good result is already factored in, a bad result will see a good thumping. I will disclose I have a small number of VRC heads which I'll be disposing of as soon as the TH is over, and an even smaller number of oppies which alas I don't think will get resurrected in time to be worth anything much at all.

If anyone has some sensible alternative ideas about where VRC is headed I'd be interested. No one can see into the future, there is a small chance that the graphite sector could lift its game but I can't see it right now, nor it appears, can the Market.....