Weslosky interviews Energizer’s Craig Scherba on graphite market misconceptions
September 4, 2014 — Tracy Weslosky, Editor-in-Chief and Publisher of InvestorIntel, speaks to Craig Scherba, President and COO for Energizer Resources (‘Energizer’, TSX: EGZ | OTCQX: ENZR) about some of the misconceptions of the graphite industry. Craig says that it is important to realize that graphite “is a bit different than other commodities; it isn’t like copper and not freely traded on the open market. Graphite is priced based on the purity of the material but also on the size of the flakes so those two different parameters there…I guess a lot of people don’t realize that it isn’t just the purity of the product, the size of the flake, as well that matters.
Tracy asks, as noted by famed graphite mining expert Jean Depatie, whether it is more complicated to get extract the graphite from hard rock. Craig clarifies: “it isn’t necessarily harder to bring [the graphite] out of hard rock but it can be more expensive, because there’s a crushing index and it becomes an engineering problem. That said, graphite is a very easy thing to mechanically separate, whether it’s hard rock or soft rock.” Graphite is a high value added type of material but it involves a rather basic process for extraction in that the closer it is to the surface the cheaper it is to extract. So, the hardness or softness of the rock does not play a big role; the ‘ease’ factor is more closely related to the resource’s proximity to the surface.
Among the fallacies associated with graphite mining, Craig likes to point out that one of the biggest is that all graphite is the same. It isn’t: “just because you have carbon in the ground does that mean that has the same physical properties.” Indeed, while the size of the flakes matters, as explained above, there are other characteristics that must be considered, including electrical conductivity, thermal conductivity, expansion coefficient, which refers to the graphite’s ability to be expanded or spread out in sheets, still retaining flexibility. Only 5% of all graphite meets these criteria. In other words, graphite must be produced to address a variety of applications and it is not a material that lends itself to generalizations. Craig also delivers a bombshell by explaining that while Tesla and the Li-ion battery have made graphite popular, the graphite market enjoys a far more diversified demand. In fact, the main driver of the graphite market is the steel industry, which uses graphite – thanks to its very high melting temperature – to make refractory linings in high temperature furnaces. Refractories account for over 45% of the current market while batteries are still in the single digit percentages. However, graphite for batteries is the fastest growing segment of demand.
Disclaimer: Energizer Resources is an advertorial member of InvestorIntel.
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Adrian Nixon is a Senior Editor at InvestorIntel. He began his career as a scientist and is a Chartered Chemist and Member of the Royal ... <Read more about Adrian Nixon>