Some interesting comments on Graphite at Canaccord yesterday. I have to admit I don't really know much about graphite and I can't remember who at the Cambridge show was asked a question about graphite and the answer was more or less "duh"
Graphite
Focus Metals* (FMS : TSX-V : $0.71), Net Change: -0.02, % Change: -2.74%, Volume: 347,843
Northern Graphite* (NGC : TSX-V : $1.28), Net Change: -0.04, % Change: -3.03%, Volume: 239,180
Energizer Resources* (EGZ : TSX : $0.29), Net Change: 0.06, % Change: 26.09%, Volume: 856,137
Strike Gold* (SRK : TSX-V : $0.25), Net Change: -0.01, % Change: -2.00%, Volume: 131,700
Orocan Resources* (OR : TSX-V : $0.38), Net Change: 0.00, % Change: 0.00%, Volume: 150,950
Not just for pencils and golf clubs. Graphite is an essential component in lithium-ion batteries which typically require 11 to 13
times more graphite than lithium. Just as lithium and lithium-related equities became the soup-de-jour not too long ago because
of the metals use in batteries and consumer electronics, the word graphite is now started to create quite a buzz. Whether or not
graphite and graphite-related equities are going to be mainstays on the screens of resource investors, only time will tell.
However, more and more industry professionals, analysts and investors are getting involved in the sector and betting a bullish
graphite market will stay long enough to provide attractive economic gains. In addition to the use of graphite in lithium-ion
batteries, millions of flexible graphite "heat spreaders" are used in consumer electronics such as flat panel displays, notebook
computers, laptops, tablets, LED lighting and smart phones. The graphite "heat spreader" provide excellent cooling for the
electronic components as it reduces "hot spot" temperatures while boosting power which results in extended product life and
improved performance. Other new uses for graphite include: i) Green Energy Storage; ii) Pebble Bed Nuclear Reactors; iii)
Graphene: and, iv) Infrared defence and stealth bomber technology. Graphene is being billed as a new miracle material is
beginning to gain worldwide attention and many in the scientific community speculate that it could revolutionize the world we
live in. It has remarkable optical, mechanical and electrical properties which make it substantially stronger than steel and at the
same time is highly elastic. Traditional uses (still being used) of graphite include: i) Steel Industry; ii) Automotive Sector; and,
iii) Lubricants, fire retardants and as a reinforcement in plastics. Annual graphite demand is expected to increase by over 50%
from 1.1 million tonnes to 1.5 million tonnes by 2020 based on the steel market alone. Demand from batteries and high-tech
applications are projected to be dramatic. Lithium-ion batteries are projected to more than double the demand for graphite to
about 2.6 million tonnes by 2020. Of total world graphite supply, 60-70% is amorphous (fine or powder) and is used for
traditional purposes such as automotive and steel making. While, 30-40% is flake, which is essential for producing batteries,
specifically lithium-ion, and for use in consumer electronics. China currently produces around 75% of the world's graphite or
about 800,000 tonnes of the estimated 1.1 million tonnes produced in calendar 2010. Most of China's resources are lower grade
amorphous. China is now the biggest importer of graphite and has closed state-owned enterprises this year to preserve its
graphite resources. Recently, the British Geological Survey listed graphite, along with antimony and rare earths, as most at risk
of global supply disruption. The U.S., who is a 100% importer of graphite, has joined China and the European Union in
classifying graphite as a critical strategic material. Some of the Canadian-listed junior graphite players include (from largest
market-cap to smallest): Focus Metals (Quebec); Northern Graphite (Ontario); Energizer Resources (Madagascar); Strike Gold
(Saskatchewan); and Orocan Resource, soon to be named "Standard Graphite" (Ontario and Quebec). |
