These macro-economic trends could send ASX graphite stocks into overdrive
Battery-grade graphite, also known as spherical graphite (SpG) or natural graphite, is consumed as an anode in lithium-ion batteries due to its relatively low cost and long cycle life but unlike lithium, the commodity has traditionally failed to grab investor attention.
Where lithium prices get all hot and frothy surging as much as 400% to record levels, graphite tends to travel at a much humbler pace – up only 19% this year, despite batteries containing 10 times the amount of graphite than lithium.
But several macro investment trends are playing out in the sector which could send the graphite market into overdrive.
According to Benchmark Mineral Intelligence (BMI) Chinese inventories of natural graphite are at unseasonably low levels raising concerns about shortages of the battery anode feedstock material.
Driven by government environmental inspections in China’s Heilongjiang province earlier this year, BMI says the lack of inventories has delayed a ramp-up in production capacity against surging electric vehicle demand.
Electric vehicle production and sales figures in China continued to break monthly records in September, both surpassing the 700,000 threshold for the first time.
— Benchmark Mineral Intelligence (@benchmarkmin) October 28, 2022
Meanwhile, investment themes like ‘resource nationalism’ have put lithium’s poor cousin into the spotlight in recent weeks as governments around the world pour big bucks into securing supply chains needed to meet the rapid growth in EV production.
Only a few weeks ago the Biden administration sent a strong signal revealing graphite’s role as a critical mineral going forward with up to $816m (US$511m) in grants to three ASX listed companies.
Two of these beneficiaries were ASX graphite stocks with the news sending the stocks’ share prices soaring 16% and 14% respectively.
As the investor landscape shifts focus towards ‘lithium 2.0’, here’s a look at some of the ASX stocks in the sector.
Syrah’s share price has increased 95.90% in the past year and was one of the lucky beneficiaries of Biden’s grants – receiving up to US$220m.
SYR says said the grant will support the potential expansion of its Vidalia Active Anode Material (AAM) facility in Louisiana, USA to a 45,000tpa AAM production capacity.
Vidalia is a vertically integrated natural graphite alternative for USA battery supply chains.
SYR hopes to begin production at the site in September 2023.
BEM kicked off a scoping study in September to confirm the commercial viability of processing fines from its Maniry Project in southern Madagascar, East Africa at a processing facility in Europe.
With the scoping study almost completed and due for release, Blackearth non-executive chairman George Bauk told Stockhead the company decided to change its name to EVION Group, reflecting its overarching goal in providing power and energy needs of the future via graphite’s critical role in decarbonisation.
“If you break up the name – ‘Evi’ is Latin for future life and ‘on’ symbolises the key turning on battery life,” Bauk said.
“Going forward, the EVION group will not only be exploring for graphite but will be producing concentrate and providing down-stream products for battery production.”
International Graphite are on track to be Western Australia’s first fully integrated mine-to-market graphite producer and an intended future supplier to the global battery minerals market.
The company recently proved that its Collie pilot plant can produce spheroidised graphite for battery anodes after delivering promising results and product specifications.
Characteristics such as the size of the spheroids and well-shaped ‘potato’ particles are highly desirable for battery anode production with the plant micronising concentrate from a size of 100 microns to a size of around 10 microns.
In the future, the company intends to establish a vertically integrated operation with the Collie downstream plant processing graphite concentrates produced at the Springdale Graphite Project, near Hopetoun in Western Australia.
RNU’s share price is also on a bit of a tear, up 65.38% so far this year as the company looks to produce purified spherical graphite (PSG) at a recently granted facility in South Australia.
Back in September, the company entered into a 40-year option-to-lease agreement with the South Australian Government-owned utility SA Water for the site of its proposed state-of-the-art Battery Anode Material facility in Bolivar, around 20km from SA’s main shipping port at Port Adelaide.
The company owns the Siviour Graphite deposit which is the world’s second largest proven reserve of graphite and the largest graphite reserve outside of Africa.
Ecograf is building a vertically integrated battery anode materials business to produce high purity graphite products for the lithium-ion battery and advanced manufacturing markets.
More than US$30 million has been invested to date to create a highly attractive mining and mineral processing graphite business.
In Tanzania, the company is developing the TanzGraphite natural flake graphite business beginning with its Epanko Graphite Project where work has been undertaken to establish a development ready graphite mine.
At this stage, stage 1 intends to produce 60,000tpa but the company is looking to complete a detailed re-estimation of the capital and operating costs which will be released during the current quarter.