Graphite

Graphite is a key component in most lithium batteries and currently is the anode. All existing systems use a full fossil fuel-powered graphite source ex-China. It is a dirty secret. So there is much activity to substitute other graphic forms. But it is not just the FF source, but improved battery performance – for both efficiency of charge and longevity. While currently, the graphite supply chain is dirty and carbon-intensive, Novonix, (NVX:ASX) from Tennesee USA is scaling up capacity to produce 150,000 metric tons per year of synthetic graphite by 2030. Consider that the forecasts are that 3m tonnes will be needed for batteries alone. The indicative life cycle analysis shows a 60% decrease in CO2 emissions (or 2.5 times) than the existing primary graphite processing facilities in Inner Mongolia and Heilongjiang Provinces, China. Others will surely follow.

Batteries use is currently a minor proportion of existing graphite production. Traditionally, the graphite industry’s bread and butter has been the use in refractory (or “heat-resistant”) bricks, which line the inside of blast furnaces to protect them from the heat generated in steelmaking. In 2021, China will produce >700,000 tonnes of flake graphite, or 70% of global flake graphite production. The growth in demand from EV batteries would increase demand to over 3m tonnes – the majority in EV and energy grid storage.

Topics Covered

  1. Graphite
  2. Graphite for Batteries Issues
  3. Graphite Sources
  4. Graphite Manufacture
  5. Canadian graphite companies
  6. Australian graphite companies
  7. USA graphite companies

Graphite

Conventional use of graphite is in blast furnaces and as well as EV batteries the market is huge as a fire retardant in building material cladding – think Grenfell Tower fire, or Australian wall cladding. With 5% content that is over 2 million tonnes demand.

Graphite can be turned into Graphene, and market researchers say this will be a $1b market by 2023.

Graphite can be up to 95% of batteries so the carbon footprint and effectiveness are key. Existing sources of graphite is fossil fuels. Hence the drive to get other sources – natural, rather than synthetic and zero carbon footprint.

Batteries take about 14% of the global graphite supply. An increase in batteries in EVs and in electricity storage has created a gold rush for natural graphite. Graphite is an essential material within EV batteries. On a weight basis, there is more graphite than lithium in a lithium-ion battery, with an estimated 54 kg required for a Tesla Model S (100kW battery). Demand for lithium-ion anode material is forecast to increase to 1.9 million tonnes by 2028, and it is anticipated that graphite will remain the anode material of choice for decades to come.

The second primary reason is strategic – China has most of the global market, so both USA and European manufacturers are scrambling to have more resilient supply chains.

Consultancy Benchmark Mineral Intelligence (BMI) sees a roughly 20,000 tonne graphite deficit in 2022, versus a similar-sized surplus last year. About 20,000 tonnes of graphite is enough to make batteries for roughly 250,000 EVs. (Reuters Dec 2021).

EV Demand drives anode demand Source: https://www.ecograf.com.au/wp-content/uploads/2021/11/2307390.pdf

Note: LFP is lithium iron phosphate, NMC have varying amounts of lithium, nickel, manganese and cobolt. Other cathode research is looking at sodium and other elements. But graphite remains the major component of batteries.

Graphite for Batteries Issues

  • Graphite is produced from fossil fuels = solely from China and uses needle coke. The current supply is both dirty and polluting and opaque.
  • Natural versus synthetic challenge.
  • All the R&D focus is on the on cathode – eg. LiFe Cobalt etc
  • 100% of anodes are currently graphic and a silicon will not displace the graphite.
  • There will be as much as for lithium but the industry is 5 years behind lithium
  • IEA forecast that Lithium will be No1 but graphite is No2
  • There are some interesting research (eg Novonix) that is looking to improve the efficiency and capacity of new sources of graphite such as ITech Minerals, Jalar, Ecograph, and Blackrock Mining.
Source: Novonix see https://www.novonixgroup.com/puregraphite/

Graphite Sources

Graphite electrodes are used in electric arc furnaces (EAF) and ladle furnaces (LFP) for steel production, ferroalloy production, silicon metal production, and smelting. Natural graphite is traded in four major flake size fractions:

  • -100 mesh;
  • +100 mesh;
  • +80 mesh; and
  • +50 mesh.

It is the -100-mesh product used in the production of spherical graphite for anodes that has analysts predicting the graphite market will enter a period of unprecedented growth.

From: Blackrock Minerals 2021
Market Dynamics by Blackrock Minerals Noosa Conference
The factories to produce batteries are concentrated in China. Over 200 new Gigafactories have been announced in the last 3 years.
From Renasco presentation – China, Japan and South Korea remain the centre of anode production
GlobalReserves. Renascor has the Siviour in South Australia.

Battery Demand shows Graphite Key

Mineral Demand Worldbank projections 2050
Worldbank Projections (PDF)

Graphite Manufacture

Synthetic graphite is made by heating a variety of carbon containing substances (including petrochemicals, pitch, coal or acetylene). When super-heated (to temperatures higher than 4000°C) the carbon atoms rearrange themselves into layers to form graphite.

Currently the manufacture of graphite is from 100% fossil fuels -with a release of CO2 and the world is seeking carbon neutral manufacturing.

For the vast majority of graphite, 100% supply chain and sustainability is hidden. There is lack of understanding of supply, and it is where lithium was 4 years ago, There are junior minors in both Canada and Australia, but the plants need to be on a path to zero carbon and sustainability.

Process from Coal – Fig 1 source is Minviro
Process – natural graphite. Fig 2 source is Minviro

Table 1.  Studies show varying levels of CO2 in anode material used in battery LCA studies

PEFCR 2018GREET 2016Ecoinvent version 3.1.Gao et al, 2018IVL
ProductCarbon blackSynthetic GraphiteNatural GraphiteNatural GraphiteSynthetic Graphite
CO2 per kg2.344.91-25.564.9*
From Minviro.

Around 75,000 tonnes of graphite is required to create 1 million EVs, meaning that 900,000 tonnes will be required to meet the 12 million EVs that will be produced by 2025.

Graphite Energy and Carbon CO2 Content

A question is how polluting is synthetic graphite productions and how polluting is “natural” graphite. Mined graphite sources have the energy required to mine, process and use. Synthetic graphite requires coking coal as the raw material, and the intensive energy in that process, which when uses fossil fuels can be very high. More detail can be found in this miners.com article.

A report by environmental consultancy and software provider Minviro states the true climate change impacts of producing battery-grade graphite can be as much as 10 times higher than published values, depending on the energy and material inputs.

Renascor is an Australian graphite miner. Here is their process, and they are focused on reduction of energy input or using green energy to reduce carbon intensity.

From Renascor Resources – supply chain and offtakes.

Canadian Graphite Companies

Nouveau Monde Graphite is developing the Matawinie graphite project near North Montreal, Quebec. The project is forecast to produce 100,000 metric tons per year over 26 years with an average concentrate purity of 97%. The company is targeting commercial production for 2022. (for more info check out this review)

https://investingnews.com/daily/resource-investing/battery-metals-investing/graphite-investing/top-canadian-graphite-stocks/

Here is some data from Investing News

CompanyCodeWhereAnnual Production PotentialCost to Production($m)
GratomicTSXV:GRATAukuam (Namibia), Quebec20,000Q2, 202199.98% purity
NextSource MaterialsTSXV:NEXTSth Madagasca17,000Q2, 202225m$566 / T cost
Graphite OneTSXV:GPHAlaska60,000 / 40 year363m95% graphite
Lomiko Metals TSXV:LMRQuebec
Northern Graphite TSXV:NGCBisset Creek25,000 /23110
Nouveau Monde GraphiteTSXV:NOUMatwinie100,000/26 years97% purity
Focus GraphiteTSXV:FMSLac Knife44,300 / 25 years166
Canada CarbonTSXV:CCBMiller, Ashbuy, Dun Raven1,50044
Mason GraphiteTSXV:LLGLac Gueret51,000 / 25 years258m, at price 484/T

Demand outlook for anode manufacturing is mounting to meet the projected 4,625 GWh of global lithium-ion battery production capacity in the pipeline by 2030, a 13% increase since the end of Q2-2021 (Benchmark Mineral Intelligence, October 2021). October announcements from battery manufacturers totaled 430,000 tpa of new anode production capacity, elevating the global projection to 5,030,700 tpa.

Representing +95% of the anode, graphite is the most controlled mineral of all battery materials, with China currently producing 100% of the global spherical graphite supply. Graphite prices continue to rise as a result of energy shortages in some Chinese provinces and major logistics disruptions (Roskill, October 2021). These price increases are a reminder of the importance of establishing strong partnerships with reliable and local suppliers such as Nouveau Monde to mitigate that risk.

Projected to be the largest and most advanced natural graphite operation in North America, Nouveau Monde is carrying out its de-risked phased development plan to build a localized, turn-key, and carbon-neutral alternative to Chinese supply.

Australian Graphite Companies

There are over a dozen ASX companies with graphite reserves but none are yet in production. (2021)

Source: Lithium Energy AGM report https://lithiumenergy.com.au/graphite/burke-graphite-project/

USA Graphite Companies

Here is a table of 16 graphite stocks. See information about graphite and graphene.(Check out the page here)

16 Graphite Stocks Traded on U.S. Exchanges
Name& Monthly ReturnsSymbolRecent Prices& Trendline Chart
Canada CarbonBRUZF
Canada Strategic MetalsCJCFF
Eagle GraphiteAPMFF
Focus GraphiteFCSMF
Focus GraphiteFCSMF
Graphite One ResourcesGPHOF
GratomicCBULF
Great Lakes GraphiteGLKIF
Green Battery MineralsGBMIF
Leading Edge Materials2013LEMIF
Mason GraphiteMGPHF
Next GraphiteGPNE
NextSource MaterialsNSRCF
Northern GraphiteNGPHF
Westwater ResourcesWWR
Zenyatta Ventures LtdZENYF
Price charts from Alpha Vantage as of most recent close.
Graphite use in USA.

Some analysts have calculated that if one invested $10,000 in 10 x $1,000 stocks then the value of those over the past 5 years would be 43%. One issue is which company will develop to production and secure sales to increase value?

Reference https://www.buyupside.com/sample_portfolios/graphiteusexchanges.php

The current value of a $10,000 investment is $38,770. The percent return is 287.70%. The annualized return is 31.13% over the past 5 years. Assume $1,000 invested in 10 different stocks. 

Additional Reading about Graphite for Batteries

Stockhead Graphite Review https://stockhead.com.au/primers/primers-graphite-stocks-asx-guide/

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