Graphite is the new strategic mineral - NGC:TSXV & NGPHF:OTCQX
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The European Union and the USA have declared graphite a supply critical mineral
Prices for large flake graphite increased from about $700 per tonne in 2005 to approximately $2,800 in 2012 due to the growth in China and other emerging economies. They have since declined to about $1,300 due to the slow down in China and a lack of growth in the US, Europe and Japan. Further price declines are unlikely as many uneconomic mines have closed and 20% of Chinese flake production has been shut down for environmental reasons. Demand growth from new applications is continuing and when we get an economic recovery, graphite prices should exceed previous highs as the world’s productive capacity has declined and no new mines have been built.
China produces over 70% of the world’s graphite. Its industry is very fragmented with many labor and environmental issues and mines that are getting older, deeper and higher cost. China is modernizing and consolidating much of its mining industry to provide for more professional management of its resources. Already over 30% of Chinese flake graphite production is closed either because it is uneconomic or for environmental reasons. Also, China wants to export value added products, not raw materials, and therefore it has export taxes and duties and an export licensing system. Chinese graphite production and exports are likely to decline in the future and stable, secure sources of high quality supply in the west are needed.
After growing strongly from 2005 to 2012 due to the development of emerging economies, graphite demand has since fallen sharply due to the slowdown in China and a lack of growth in the US, Europe and Japan. While increased economic growth is required for demand from traditional uses to return to previous levels, demand from new applications continues to grow rapidly and is set to dominate the market. The demand for graphite for lithium ion batteries has increased from almost nothing five years ago to over 20% of the market and will continue to grow strongly, especially as hybrid and all electric vehicles become more popular.
Graphene is one of the top research topics in the world with billions of dollars of funding committed. At present there is no process for making commercial quantities of graphene and there are no commercial products based on graphene. Dozens if not hundreds of organizations are working on these challenges and once solved, the results could revolutionize the way we work and live. Natural graphite is one source of graphene and will probably supply the lower technology applications such as conductive inks and coatings and composite materials. There are up to three million layers of graphene in a one millimeter thickness of graphite so a little goes a long way.
EVs are not going to replace the internal combustion engine. However, there are many uses and markets where they make sense including short range commuting, city driving, taxis and delivery vehicles. EVs only need to become modestly successful to have a big effect on the graphite market. If one per cent of the new car market (about 700,000 cars) were EVs, a couple new graphite mines would be required. The proposed Tesla “gigafactory” requires up to six new mines. China alone plans on having five million EVs by 2020.
Expandable graphite is one of the fastest growing markets along with Li ion batteries. It involves treating XL flake graphite with a dilute acid solution and heating it to cause the flakes to split apart and increase hundreds of time in volume. This material is pressed into sheets to create a foil which can be cut into shapes and used in many applications including heat spreaders in electronics, gaskets and fuel cells. Fuel cells are already a billion dollar industry with commercial buses, forklift trucks, standby power plants, etc. already in operation. There are commercial fuel cell cars now and many observers expect them to become more popular more quickly than EVs.