|Graphite is an emerging critical metal where prices have more than doubled in the last year to ~$3000 per tonne. The industry is a robust 1.1Mt and is expected to grow at a steady pace to 1.6Mt by 2020 based on strong industrial demand for the mineral. In addition to this market growing 500,000 tonnes in less than a decade, there is early indications that the industry is expected to see strong incremental demand from the alternative (Green) energy industries as well as the automotive industries in alternative fuel vehicles. |
Graphite's qualities of being both lightweight and an excellent conductor of electricity make it an ideal for Lithium Ion batteries which is the preferred technology that is gaining traction in the industry over nickel metal hydride (NiMh). The batteries consistently a have longer charges, decreased charge times, are more powerful which are deciding factors for a consumer when it comes to electric vehicles.
Tesla vehicles which are the standard in the industry that everyone matches up to contain the most graphite of any vehicle over a 100kg of graphite which is about $300 US at current market prices. Fuel Cells and nuclear pebble bed reactors are also expected to put further increases on demand in the industry that is currently starved for supply.
In addition to supply constraints on the industry with decreasing supply, China's who controls 70% of the supply of graphite in the industry is putting export restrictions and taxes on the commodity in order to meet their own electrification needs. China is determined to be a leader in the electric automobile and may end up being a net importer determined to build world leading electric vehicles with their partnership with GM being the first major step in this direction. On top of regulations, mining graphite in China is increasingly more expensive because the open pits are depleted and more expensive underground operations render these mines less competitive on an international scale to the untouched and untapped graphite resources in other parts of the world such as Canada which is the premiere place to explore and develop graphite mines in the western hemisphere.
This is a sector where mines are needed in a hurry to meet what may be over 100% demand increase by 2020 if adoption projections of electric vehicles are accurate. The standard graphite operation may produce between 20,000 tonnes to 50,0000 tonnes of graphite a year which means that 20 to 30 new graphite mines may be needed by that time. This is not like the rare earth industry where everyone is fighting over 70,000 tonnes of demand in three years and them maybe another 150,000 tonnes by 2020. This is a sector where mines are needed and there is at minimum 500,000 tonnes of new supply needed!!!
A lot of them.