Battery-focused IPO International Graphite to benefit as anode demand ‘goes through the roof’
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International Graphite’s main game is an integrated mine and downstream graphite business in WA, with the ultimate goal to produce battery anode material for battery makers.
Unprecedented growth in electric vehicle production will drive a huge uptick in graphite demand and pricing over the next decade.
A lithium-ion battery needs 10 times more graphite than lithium, with each electric vehicle requiring ~55kg of flake graphite to make the battery anode.
Experts say the supply deficits are already here, and prices are beginning to respond. The Benchmark Graphite Price Index is currently up by 22% year-on-year.
Meanwhile, Europe and the US are making concerted efforts to control their own supply chains, which means bringing new, non-Chinese graphite supply on stream.
China currently controls 71% of worldwide natural graphite supply, 65% of worldwide synthetic graphite supply, and 100% of commercial spherical graphite supply.
This confluence of factors puts advanced Aussie stocks like International Graphite in a very good spot.
Established in 2018, International Graphite (ASX:IG6) will list on the ASX Thursday following a $10m IPO.
While there is a general trend for graphite explorers and miners to subsequently move downstream to capture more value, IG6 was established first-and-foremost with a focus on the downstream space.
IG6 Executive Chairman Phil Hearse is one of Australia’s leading metallurgists and an authority on graphite project development. He says there is a huge opportunity for downstream processing here in Australia.
“I have a company called Battery Limits, which is a consulting engineering company. About 7-8 years ago Battery Limits got into the graphite space,” he told Stockhead.
“We ended up doing multiple feasibility studies and development work for ASX and AIM listed companies in Africa and Australia.
“We realised then that there was opportunity for downstream processing facility here in Australia. Downstream was so dominated by China, the Western world was looking for alternative options.”
It is a lucrative business to be in.
Graphite concentrate sells for between $US600/t and $US1000/t, Hearse says.
The purified micronised and spheronised graphite, which IG6 plans to produce initially, attracts ~$US3500/t.
‘Micronising’ is taking the feedstock and reducing it down to the range of about 5-25 microns in size, which is tiny.
When you spheronise it, you are making small spheroids out of that material, which is a step along the path to producing battery anode material.
“We expect to be able to sell the micronised graphite separately, because there is a lot of uses for that,” Hearse says.
“With the spheronised material we will be selling that as an interim product, but our end game – without a doubt – is to take it right through the value chain so we can produce the final battery anode material.”
IG6 has already established a piloting facility (a smaller version of a commercial plant), for the downstream processing of graphite products, in the regional town of Collie in WA’s South West, with the support of a $2m grant from the WA government.
“The first production line for micronised and spheronised graphite will come from overseas sources,” Hearse says.
“That will allow us to get all our systems and processes sorted, our customer relationships established.”
In about October last year, IG6 contacted battery metals explorer Comet Resources (ASX:CRL), which had a graphite resource near Hopetoun on WA’s south coast.
“Prior to that we were purely focused on downstream processing, and we were planning to import feedstock for processing,” Hearse says.
“But we talked with Comet and realised what great synergies there were to enable us to have a complete, vertically integrated graphite operation – from mine to end customer — all situated in WA.
“This was very attractive. It gave us quality assurance control, and basically enabled us to offer to our customers a consistent product.”
Springdale has now been vended into IG6.
It has an existing JORC compliant resource of 15.6Mt at 6% graphite, including a higher grade 2.6Mt @ 17.5%.
Springdale graphite has already performed exceptionally in initial Battery Anode Material (BAM) benchmarking tests, which means IG6 can hit the ground running.
“Once we get Springdale up and running, we will be expanding the processing facility in Collie to accommodate the feedstock from Springdale,” Hearse says.
At Springdale, there are some highly prospective exploration areas around the inferred resource which IG6 plans to drill.
“We are also planning to increase inferred resource up to indicated status and then at the same time be conducting a feasibility study,” Hearse says.
“We will be doing more of the metallurgical test work on Springdale and downstream processing.
“And then at Collie we are setting up this new R&D facility, and our first production facility for micronised/spheronised graphite.
“We will also be doing a feasibility study into the whole operation.”
For starters, a huge shortfall in graphite supply is coming.
“It is mind-blowing when you see the demand supply graphs,” Hearse says.
“From about 2025 on, the supply demand curves start to diverge, and from about 2027 demand goes through the roof.
“And there is not the supply to meet it.”
Secondly, IG6 joins the bourse with a $33m market cap. Other exploration and development companies in graphite space are worth hundreds of millions.
“I think the best comparator for where we want to be is Renascor Resources (ASX:RNU) because their operations are fully within Australia,” Hearse says.
Having the mine and downstream processing in WA – one of the best jurisdictions in the world – gives customers supply chain assurance.
“What comes with that is ESG compliance – we are in control of our ESG compliance,” Hearse says.
“These are the real things that set us apart.”
This article was developed in collaboration with International Graphite, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.