Asian tigers jostle for graphite supremacy
Two neighbours in graphite — but two diverging stories. China, trying to cling on to its supremacy with its grasp weakened with every passing discovery elsewhere. South Korea, wanting more and more graphite, a major resource across the demilitarized zone in North Korea and thus unobtainable for Seoul, even though the north‘s output is greater than South Korea‘s present annual consumption.
Neither country, China or South Korea, has too many options considering one important fact as spelled out recently by Gerard Anderson, writing in his company’s annual report, his company being Archer Exploration which has an advanced exploration project in South Australia. That fact is: “Substitution of graphite by other minerals is highly unlikely as no mineral is so versatile and with such unique and important and physical properties”.
Here’s another factor: who is producing the graphite. As of 2011, this was the ranking:
- China 800,000 tonnes
- India 150,000 tonnes
- Brazil 75,000 tonnes
- North Korea 30,000 tonnes
- Canada 26,000 tonnes
- Russia 14,000 tonnes
- Mexico 8,000 tonnes
- Norway 8,000 tonnes
- Romania 7,000 tonnes
(Of course, China will maintain its supremacy but some of the lower rankings could change as new producers — one thinks of Mozambique, Madagascar, Australia, Sweden and others — emerge.)
First China. Anderson sums up the situation there and underlines a point we have been making here on Investor Intel. That is, Chinese graphite is declining in quality as easily mined surface oxide deposits are being depleted. Costs are also under considerable pressure from tightening labour and environmental standards. One thing that is now generally accepted is that around 200 mines in Hunan have been closed on government orders.
Second, South Korea. Its present consumption is around 20,000 tonnes a year. This must grow, and grow fast. South Korea hosts major steel and automobile industries, both big users of graphite. And we are seeing developments with South Korean companies such as Samsung, LG Chemicals and Hyundai becoming more involved with technological developments in electronics, batteries and automobiles, the principle sectors that are driving new demand for flake graphite. South Korea is one of the largest global consumers of graphite, and certain to get to become a much bigger one.
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This week we noted an interesting new announcement by Lamboo Resources, an Australian company with graphite exploration under way in South Korea (and, so far, one of a very few who have bothered to start looking for the mineral there).
Lamboo set out just what is happening in South Korea. Substantial South Korean multinational enterprises have announced a focus on products which require high quality flake graphite, such as lithium-ion batteries, super capacitors and graphene.
It is being run by KCTECH, an organisation started in 2002 under another name but changed this year to Korea Institute of Carbon Convergence Technology. KCTECH is working with 17 corporations; one, Hyosung ( a typical Korean conglomerate or chaebol, will invest $1.2 billion in this program by 2020 to increase carbon-based material production. Samsung is financing research into commercial applications for graphene.
Also, if South Korea can lift graphite production, there are potential export markets, particularly China and Japan. Lamboo says demand for flake graphite in North Asia is expected to grow far more over the next five years that demand in the rest of the world.
It will be an Asian game-changer if South Korea can master the new technology — and, at the same time, start producing its own graphite. China’s grip on the industry would be weakened even further.
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