The Market for Graphite Has Not Gone Away; It Is Merely Taking a Nap

Korean scientists have developSleeping Demanded a battery that could revolutionize the portable electronics market. The battery has the appearance e of the commonly used
lithium-ion batteries; however, the new battery is made up of nano-particles
drenched in a graphite solution at the central core. As the current flows, the
graphite helps to increase conductivity and the charging speed. The researchers
found that this new graphite battery can achieve a full charge, through a normal
domestic socket, at a rate anywhere from 30 to 120 times faster than a
currently available Li-ion battery. This means that a cell phone battery that
normally needs at least 2-3 hours to charge, could achieve a similar charge in anywhere from six minutes to less than one minute. The advantage over other
fast-charging batteries is that the new graphite battery is also able to retain
the charge: a minute or two for a 12 hour charge is a rather practical
proposition. This new graphite battery is not yet ready for commercial
distribution, nor is it known whether or not it will even make it into
production. However, it does highlight the potential for the graphite market
for batteries alone; not just electronics, car batteries are expected to see multi-fold
demand. Graphite prices have dropped from up to USD$ 3,000/ton to USD$ 2,000/ton or less. These are still remarkable prices in the historical price context for graphite, which has typically been closer to USD$ 700 than not.

The current price valuations are a factor of the continuing worldwide economic
recession – or slowdown. Graphite stocks have halved, or worse, as a
consequence. Nevertheless, the drop is not a reflection of the actual value of
graphite. In China, which has the fastest growing automobile market, electric cars are more popular than they are in the West, which suggests battery demand will surge –
and that’s just one application. Graphite share price valuations have suffered
in the past few months after buoying last April. While some analysts have
interpreted this as the validation of their ‘bubble’ cries, the conditions that
pushed graphite prices higher are still valid; so much so that the US State
Department and the European Commission maintain that graphite is a critical mineral
because of its applications in the development of batteries, steel, lightweight
composites for aerospace and pebble bed nuclear reactors. The average mobile
phone or laptop Li-ion battery already contains 20 times more graphite than it
does lithium; the new Korean experimental batteries will need even greater proportions
of graphite, which suggests that demand for graphite will increase by several
factors before the end of the decade.

Until recently, and not unlike the situation for rare earths, China was seen as maintaining an unchallenged monopoly over graphite. Indeed, China supplies half of the graphite needs of Europe, Japan or North America (combined). Overall, China is said to account for 70% of world graphite production, but, this could change very soon
as export restrictions and greater downstream processing comes on line in
China. China itself will be cutting its own supply of graphite as new
legislation comes into play, restricting the opening of new mines and closing
many, failing to meet the new and tougher standards. Northern Graphite believes
that little more than a tenth of graphite mines in China’s Hunan province will
be left operational, as new production standards are adopted. Graphite
suppliers in China will likely undergoing a consolidation and rationalization
echoing the new provisions for rare earth miners. The graphite supply problem
is that there are few active mines for this resource outside China and a few
dozen are said to be needed in order to address demand.

There are some mines closer to reaching production stage than others, some
of these featuring outstanding grades and varieties such as Northern Graphite
or Focus Graphite – the latter also developing expertise in the scalable
production of graphene. It makes sense to revisit and begin graphite mining
projects in North America, as the same market conditions that drove its production
to China some 25-20 years ago, are no longer valid. Airplanes were still made mostly
of aluminum, Cellular phones did not exist then and computers existed only in
special large rooms in large offices and factories – not in the average
household. The demand for graphite over the rest of the decade might be best
described as being acute, and the alarm of higher prices will be sounding soon
enough, especially in view of the time needed to bring the new mining prospects
to production. Even then, the mines that will truly make it are those able to
extract high purity or flake graphite, such as the ‘Sri Lankan’ or the jumbo
flake types.  Surely, petroleum derived graphite will continue to fill the more basic and common applications from sports equipment to alloy additives or carbon fibre, however, naturally occurring flake graphite is the variety needed to meet the needs of the new technologies and applications. Ultimately, mines need time to proceed from exploration to production and the fastest to reach production will be able to best capture the wave.

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Alessandro Bruno

About Alessandro Bruno

Alessandro Bruno holds a BA, MA. He has worked for the United Nations in Libya and specialized in Middle Eastern, African, and South American affairs. Alessandro has worked as an industry analyst, lived and worked abroad extensively and is fluent in English, Italian, Spanish and French with a working knowledge of Portuguese, Arabic and German.

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