Graphite has a huge role to play in the renewables future... but why hasn't the market realised it yet?

Experts say there’s a chance graphite could become a better play than lithium, so why hasn’t the market caught on yet?
Maybe ‘cos 99% of battery graphite production is concentrated in China….
But some say graphite is the next battery mineral to take off

Most people are familiar with graphite because of its use in the humble pencil or in refractory (‘heat resistant’) bricks, but the critical mineral has a far greater and much more important role to play as we shift towards a low-carbon economy.

Graphite flies under the radar when discussing lithium-ion batteries but an EV battery contains around 50kg of the stuff, around 10 times the amount of lithium required, so it’s playing a huge part in decarbonisation by way of energy mobility through batteries.

It is the -100-mesh product (also known as natural graphite concentrate), used in the production of spherical graphite for anodes in lithium-ion batteries that has analysts predicting the graphite market will enter a period of unprecedented growth.

Benchmark reckons a structural deficit is looming as global demand begins to outstrip supply, Credit Suisse says there’s a chance graphite could become a better play than lithium, and the World Bank forecasts low-carbon energy technologies will require 4.5Mt of graphite per year by 2050.

“That’s a 500% increase over 2018 levels and around a 318% increase over the total graphite produced in 2019,” Peak Asset Management’s Conor Daley said.

But unlike lithium, where prices get all hot and frothy surging as much as 400% in the past year to record levels, graphite prices in comparison are somewhat mediocre – up by 22%… but still up.

Graphite hasn’t captured the mainstream attention of investors globally yet and we asked Talga Resources’ (ASX:TLG) managing director Mark Thompson why.

Buckle up and prepare for graphite’s take-off

“Graphite has been flying under the radar because lithium, copper, and cobalt are old, well understood metals that are publicly traded and visible,” he said.

“Around 99% of battery graphite production is concentrated in China and the rest of the world hasn’t really known much about it, hasn’t had to think about it but they are beginning to now.

“It isn’t publicly traded – it’s a non-metal so I think people find it a little harder to understand but because it is 50% of all the batteries and because products you make from graphite like graphene can change the world for the better, it is growing in popularity, and I would say the time for graphite is now.”

Graphite has another critical role to play as the source for making graphene, which is an ultra-thin, super strong, lightweight material that when added to things such as paint coatings, concrete, plastic, fibre glass, wind turbines or solar panels makes them stronger, lighter, and faster.

Researchers have discovered that adding even a trace amount of graphene – about 1 or 2% – into materials can make a massive difference.

It is therefore believed to hold the potential in revolutionising entire industries such as electricity, conductivity, energy generation, and batteries.

“What we are seeing now is demand for batteries is only just starting to hit graphite,” Thompson said.

“It is not being speculated on, it’s just simple business demand.

“Graphite is the next battery mineral to take off.”

NOW READ: Graphite stocks guide

ASX graphite news

NOVONIX (ASX:NVX)

NVX shares shot up yesterday after revealing that its GX-23 synthetic anode graphite Life Cycle Assessment demonstrated an approximate 60% decrease in global warming potential relative to the conventional anode grade synthetic graphite produced from Inner Mongolia, China.

It also returned a 30% decrease in global warming potential when compared to the anode grade natural graphite in Heilongjiang Province, China.

The company said both regions in China hold the largest operators and producers of synthetic and natural anode grade graphite in the world, accounting for 79% of worldwide production.

“This life cycle assessment also helps to illuminate our continued path forward to further reduce the environmental footprint of ourselves and our customers, through the creation of the first US domestic supply chain of battery grade synthetic graphite,” NVX CEO and co-founder Dr Chris Burns said.

The assessment also found an approximate 67% reduction in global warming potential in NMC-811 batteries using Novonix synthetic graphite, which is roughly 2.5 times better than the conventional synthetic graphite produced from Inner Mongolia.

AND a 40% reduction in global warming potential was also discovered in LFP batteries using Novonix synthetic graphite vs natural graphite from Heilongjiang Province – a pretty big deal as these findings suggest NVX is one of the best in class for lengthening the lifetime of the battery and greater energy efficiency.

Volt Resources (ASX:VRC)

Volt is set to raise $2m after receiving commitments from existing shareholders and new investors as it looks to recommence production at the Zavalievsky Graphite mine and processing facilities in Ukraine.

The company says the funds will also be used to continue the production of test work samples for battery anode material for lithium-ion battery cell manufacturers, ultra high purity graphite for alkaline batteries (Urban Electric Power), and lead acid batteries (Apollo Energy Systems).

Plans are also in place to progress feasibility studies for battery anode material production, update the stage-1 feasibility study at the Bunyu Graphite Project in Tanzania, and continue Bunyu offtake discussions.

Graphite stock to watch

Newly listed and battery-focused ASX lister, International Graphite (ASX:IG6) surged some 97.5% in its first session.

The integrated mine and downstream graphite business in WA says its goal is to produce battery anode material targeting the mega-growth in electric vehicle production which will drive a huge uptick in graphite demand and pricing over the next decade.

While there is a general trend for graphite explorers and miners to 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 believes there is a huge opportunity for downstream processing here in Australia.

The company 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, and has entered a deal with Comet Resources (ASX:CRL) to form a vertically integrated graphite business.

Comet gained a 25 per cent stake in the company by offering up its Springdale graphite project to act as a feedstock source for International Graphite’s facility.

At Stockhead we tell it like it is. While International Graphite is a Stockhead advertiser, it did not sponsor this article.