The Impact of Growing Graphite Demand on Canadian Markets
With demand for large flake graphite growing, it is projected that 25 new graphite mines will be needed worldwide by 2020. Furthermore, as China is expected to cut back on production, a supply squeeze for all flake sizes is especially imminent. As the U.S. has no graphite producers, Canada’s nascent graphite industry is poised to benefit massively from the burgeoning green technology economy.
Lithium battery growth, fueled by the expanding electric vehicle (EV) market, is the primary driver. Upwards of 30 kilograms of graphite is used in one EV, and there is roughly 20 to 30 times more graphite than lithium in a lithium cell. This means that large or jumbo flake deposits will experience the most growth, but refining even the best ore material into battery grade graphite can be a costly affair, and so having both a large or jumbo flake deposit and an economical separation process is critical to gaining exposure to advanced materials markets.
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One such deposit in Southern Canada is Bissett Creek, a great asset in that approximately 90% of the contained graphite is thought to be large flake, the highest ratio in the industry. The site is owned by Northern Graphite Corp.(TSXV: NGC | OTCQX: NGPHF) (“Northern Graphite”), and construction is expected to begin this year with maiden production expected in 2019. The Canadian graphite scene may be somewhat stunted now, but there is already a queue of deposits waiting to come online over the next decade, but importantly, Bissett Creek will be one of the first to market.
The value of a graphite deposit depends on both flake size and purity. Large flake (+80 mesh) and high carbon (+94%) varieties command the highest prices. Over 28 years of operation, an average of 20,800 tonnes of graphite concentrate at 94.5% Cg will be produced at Bissett Creek, and Northern Graphite is simultaneously developing a chlorine-based process that will affordably purify root material into the highest value products, something that has been predominantly done in China until now.
The process is notoriously resource hungry and reagent costs can spiral quickly, but Northern Graphite has teamed up with Hatch Inc., a team of engineering consultants, to solve the known issues by incorporating Hatch’s existing intellectual property into the construction of a reactor that is capable of affordably purifying graphite into 99.95% graphitic carbon (Cg). In tandem with the development of Bissett Creek, this would allow the company to create considerable shareholder value by establishing its own anode manufacturing plant and licensing the process to other operations (all graphite needs to be refined to some extent).
High growth applications are only just beginning to impact demand and consumption of graphite to any extent. As such, prices still have a long way to climb compared to other battery-related commodities (cobalt & lithium), meaning that graphite remains an overlooked and undervalued part of the energy storage boom. This is changing, however; significant market activity has been spotted across the mining sector, with investment from the general public on the rise. We are at the beginning of a Canadian mining renaissance made possible by China’s new attitude towards polluting industries and the rise of stored electricity, and I expect Northern Graphite to become a long-time contributor.