Westwater Resources, Inc. (NYSE American: WWR), an American graphite miner and manufacturer based in Colorado, recently made significant strides in solidifying its position in the graphite anode market. On February 5th, Westwater Resources inked a conditional offtake agreement with South Korean firm SK On Co., Ltd. securing a deal to supply up to 34,000 metric tons of natural graphite anode products to support SK On’s battery manufacturing operations across the United States.

SK On is a subsidiary of the SK Group, South Korea’s second-largest conglomerate which currently operates two electric vehicle (EV) battery plants located in Georgia and is working with both Ford Motor Co. and Hyundai Motor Group to construct two additional battery plants.

This move is part of Westwater’s strategic approach to vertically integrate the graphite anode supply chain, ensuring a steady and reliable source of graphite for key industries such as electric vehicles, military applications, and energy storage systems. Westwater Resources provides a compelling investment opportunity, as the company looks to capitalize on emerging geopolitical and macroeconomic factors contributing to increased graphite demand from domestic miners and producers.

About the Company

Founded in 1977 and headquartered in Colorado, Westwater Resources is a prospective graphite miner and producer with two graphite mining properties and a future anode production facility located in Alabama. The flagship Coosa Graphite Project is the largest graphite deposit in the lower United States and is located in the heart of the Alabama Graphite Belt, an area renowned for significant historic graphite production. The property covers 42,000 acres and contains 4.5 million metric tons of inferred and indicated graphite concentrate.

Alongside hosting graphite, the Coosa project hosts prospective vanadium mineralization, another critical mineral in the energy transition. Westwater is currently in the process of constructing one of the United States’ premier graphite processing facilities located in Kellyton, Alabama, which is planned to be online and producing 12,500 metric tons of graphite anode products by 2026 and will produce 50,000 metric tons of graphite anode products per year once operating at full capacity in 2028. The company’s vertical integration positions Westwater Resources as a key player in meeting industry needs while maintaining a balanced approach to growth and innovation.

Geopolitical and Macroeconomic Factors

Through strategic acquisitions and deal-making, Westwater now finds itself with a competitive advantage to become one of the United States’ premier graphite miners and producers by 2028. Geopolitical and macroeconomic developments have contributed to the urgency of the US government to take action in supporting the development of graphite mining and production infrastructure. Recent Chinese export controls on graphite underscore the national security concerns associated with a lack of graphite mining and processing within the United States. China – which already produces 70% and refines 90% of the world’s graphite supply – will now force exporters to seek permits for the shipment of two categories of materials, encompassing high-purity, high-hardness, and high-intensity synthetic graphite material, along with natural flake graphite and its associated products.

In the following months of the enactment of this policy, Chinese graphite exports slumped over 91% signaling tough times for foreign importers of the product. On the US side, graphite miners have recently lobbied the Office of the United States Trade Representative to include graphite on the list of Section 301 tariffs originally imposed by the Trump administration and further expanded by the Biden administration. This would see a 25% tariff added onto Chinese graphite. These policies leave Westwater Resources with the strategic advantage to capitalize on the US “friendshoring” initiatives which aim to produce and obtain raw materials either domestically or from a coalition of nations that uphold common principles and beliefs.

Management’s ability to develop a vertically integrated supply chain, will result in synergies which sees the graphite go from the ground to the manufacturer, affording the company the opportunity to fully capitalize on each stage of the production process without having to turn to third party miners or processors. The recent deal signed with SK On is the first step in ensuring Westwater will take advantage of this shift to domestic production and processing. As the company continues to penetrate the domestic graphite supply market, Westwater can ensure a consistent and stable access to essential graphite resources, reducing dependency on foreign sources and mitigating risks associated with geopolitical uncertainties.

Graphite Supply Deficits

Graphite demand is steadily increasing, and is estimated to grow by 70% over the next five years. It is assumed that by 2025 graphite demand will overtake supply and supply deficits will begin to take hold of the market. While previously mentioned geopolitical ramifications will only contribute to supply constraints. These price dynamics will inevitably result in a supply deficit as demand continues to outpace supply. The United States has already enacted import controls on other key battery materials, and any further escalations in US-Sino trade disputes would potentially see an even tighter squeeze on the graphite market, from both the Chinese and American side.

It is estimated that by 2030 the graphite supply of stable democracies – the key beneficiaries of ‘friendshoring’ policies – will face a 29,581 thousand metric ton shortfall, a cause for concern considering graphite currently composes approximately 30% of lithium-ion batteries and is the largest component by weight within the battery. Furthermore, graphite composes 95% of anode material used in lithium-ion batteries, making it a necessary anode component in any EV battery as currently there are no replacements. The necessity of graphite as an anode material in EV batteries ensures that Westwater’s graphite anode products will remain in high demand. Since Westwater plans to have both the Coosa Mine fully operational and their Kellyton Anode Plant operating at full capacity by 2028, the company will be able to benefit from the market shortfalls in an environment of increased demand and waning supply by being able to provide up to 50,000 metric tons per year of graphite anode to manufacturers.

Proprietary Production Process and Ultra High-Purity Graphite

Another strategic advantage that Westwater has is in its proprietary production process. The tailormade production process – which is currently patent pending – has resulted in lower production costs, decreased CO2 emissions, and increased product purity. Moreover, the process is significantly more environmentally friendly than traditional processing techniques which use toxic chemicals such as hydrofluoric and hydrochloric acid, neither of which are used in Westwater’s proprietary process.

The exclusion of these chemicals from the production process improves the overall footprint of the company while also decreasing the liability of dealing with these toxic chemicals. This production process results in an ultra high-purity product. Whereas battery manufacturers require 99.9% graphite purity for their batteries, Westwater will be able to produce anode products with 99.95% purity, putting it above the required purity for battery applications. Westwater will also be able to tap into expanding graphite markets such as military applications, and grid batteries which require ultra high-purity graphite. The ability to produce ultra high-purity graphite anode products coupled with the decreased environmental footprint ensures that Westwater upholds key Environmental, Social, and Governance (ESG) principles in line with industry standards without sacrificing product quality.

Ultimately, Westwater Resources’ ability to position itself as a vertically integrated graphite miner and producer has placed it in a prime position to take full advantage of emerging geopolitical and macroeconomic factors in the graphite market. Future graphite supply deficits ensure that demand for Westwater Resources’ graphite will remain elevated. Their proprietary production process enables the company to produce an ultra high-purity graphite anode product while maintaining environmental consciousness. Westwater’s market cap is approximately USD$28.78M and the WWR stock is trading at approximately $0.50 per share (recorded at 2:45 PM EST, May 7, 2024).

In a recent InvestorNews interview with host Tracy Weslosky, Zentek Ltd.‘s (NASDAQ: ZTEK | TSXV: ZEN) CEO and Director, Greg Fenton, discussed China’s recent move to restrict graphite exports and its potential impact on global supply chains and the electric vehicle (EV) industry.

Concerns about China’s dominance in supplying critical minerals to the EV industry have prompted governments to identify this as a significant risk. Greg said that the recent restrictions on graphite exports highlight the importance of creating a North American battery supply chain. Greg underscored the potential for this situation to significantly alter the EV landscape. Foreseeing long-term growth, Greg discussed why electric vehicle manufacturers will need to diversify their supply chains away from China.

Greg believes these restrictions will shift the focus to North American graphite producers. Highlighting Zentek’s Albany graphite deposit in Ontario, Canada, as a promising source of high-purity graphite, Greg emphasized the need for government and industry investments in North American graphite projects.

To access the complete interview, click here

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About Zentek Ltd.

Zentek is an ISO 13485:2016 certified intellectual property technology company focused on the research, development and commercialization of novel products seeking to give the Company’s commercial partners a competitive advantage by making their products better, safer, and greener.

Zentek’s patented technology platform ZenGUARD™, is shown to have 99-per-cent anti-microbial activity and to significantly increase the bacterial and viral filtration efficiency of both surgical masks and HVAC (heating, ventilation, and air conditioning) systems. Zentek’s ZenGUARD™ production facility is located in Guelph, Ontario.

Zentek has a global exclusive license to the Aptamer-based platform technology developed by McMaster University which is being jointly developed Zentek and McMaster for both the diagnostic and therapeutic markets.

To learn more about Zentek Ltd., click here

Disclaimer: Zentek Ltd. is an advertorial member of InvestorNews Inc.

This interview, which was produced by InvestorNews Inc. (“InvestorNews”), does not contain, nor does it purport to contain, a summary of all material information concerning the Company, including important disclosure and risk factors associated with the Company, its business and an investment in its securities. InvestorNews offers no representations or warranties that any of the information contained in this interview is accurate or complete.

This interview and any transcriptions or reproductions thereof (collectively, this “presentation”) does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for or purchase any securities in the Company. The information in this presentation is provided for informational purposes only and may be subject to updating, completion or revision, and except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any information herein. This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking statements are based on the opinions and assumptions of the management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. This presentation should not be considered as the giving of investment advice by the Company or any of its directors, officers, agents, employees or advisors. Each person to whom this presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. Prospective investors are urged to review the Company’s profile on SedarPlus.ca and to carry out independent investigations in order to determine their interest in investing in the Company.

China to impose some graphite and processed graphite materials ‘export permits’ from December 1, 2023

Last week it was reported that China, the world’s top graphite producer plans to curb exports of key battery material by implementing export permits for some graphite products from December 1 to protect national security. Another report stated: “China graphite export restrictions could hinder ex-China anode development….if it lasts into the longer term, it is likely to accelerate the build-out of a localized graphite and battery anode supply chain outside China.”

Graphite is the number one metal required for lithium-ion batteries making up about a 28% share. It is used in the anode.

The world is very dependent upon China to supply processed graphite material and anodes for Li-ion batteries

The reason why this is huge news in the graphite world is that China produces 67% of global natural flake graphite supply and refines more than 90% of the world’s graphite into active anode material (typically spherical graphite). If China were to deny or delay permits for spherical graphite it will cause major problems for anode manufacturers outside China, such as those in South Korea, Japan, or North America.

China currently produces ~77% of global lithium-ion batteries and 75-80% of global electric cars, thereby completely dominating the industry. If the West is shut out from sourcing processed EV battery materials from China then they will have a major problem producing their own EVs. China plans to prioritize EV battery materials for their own needs. This is why President Biden introduced the Inflation Reduction Act (IRA) and the EU introduced the EU Critical Raw Materials Act. Both are designed to address the shortages in the EV supply chain and the forecast shortages of future supply of critical raw materials. The problem is the IRA has done little to address the supply of raw materials and the EU Critical Raw Materials Act is woefully inadequate and targets fall way short of what will be needed.

Which western graphite companies can rise to meet the challenge to establish an ex-China graphite supply chain

The leading western graphite companies that are working to establish an ex-China supply chain for flake graphite, synthetic graphite, and spherical graphite include:

• Syrah Resources Limited (ASX: SYR) – Largest western flake graphite producer with their 350,000tpa flake graphite capacity Balama Mine in Mozambique. Currently constructing the Vidalia spherical graphite facility in Louisiana, USA with Stage 1 production plans to produce 11,250tpa of spherical graphite. Longer term they plan to expand to 45,000tpa in 2026 and then to >100,000tpa by 2030 with an Europe/Middle East facility. Syrah already has an off-take agreement with Tesla (NASDAQ: TSLA). Syrah’s stock price has surged ~80% higher the past week following the release of the China export permits news.
• Nouveau Monde Graphite Inc. (NYSE: NMG | TSXV: NOU) – Is rapidly progressing their plans for their Matawinie Graphite Mine and Bécancour Battery Anode Material Plant in Quebec, Canada. The company is working with Panasonic to qualify their graphite anode material. Panasonic supplies Tesla with batteries.
• Northern Graphite Corporation (TSXV: NGC | OTCQB: NGPHF) – Owns graphite producing and past producing mines in Quebec, Canada and Namibia. They also own the Bissett Creek graphite Project in Ontario, Canada. The Company state that they are “North America’s Only Significant Natural Graphite Producer”. The Company plans to develop one of the world’s largest battery anode materials facilities in Baie-Comeau Québec with 200,000tpa of capacity.
• NextSource Materials Inc. (TSX: NEXT | OTCQB: NSRCF) – A new graphite producer from their Molo Graphite Mine in Madagascar with Phase 1 capacity of 17,000tpa of flake graphite production and plans to expand to 150,000tpa. The Company’s short term plan is for a Battery Anode Facility in Mauritius and longer term for similar facilities in USA/Canada, UK, EU.
• Magnis Energy Technologies Ltd. (ASX: MNS | OTCQX: MNSEF) – Magnis aims to produce high performance anode materials utilising ultra-high purity natural flake graphite from their Nachu Graphite Project in Tanzania. Magnis’ partially owned U.S.-based subsidiary Imperium3 New York, Inc (“iM3NY”) operates a gigawatt scale lithium-ion battery manufacturing project in Endicott, New York.
• Talga Group Ltd. (ASX: TLG) – Own the integrated mine to anode Vittangi Graphite Project in Sweden. In September 2023 Talga broke ground on their 19,500tpa anode facility, stating “the refinery is projected to be the first commercial anode production in Europe for electric vehicle Li-ion batteries”.
• Novonix Limited (NASDAQ: NVX | ASX: NVX) – Has a production capacity target of up to 20,000 tpa of synthetic graphite anode material from their Tennessee facility in the USA.
• Anovion Technologies (private) – The USA anode producer plans to invest US$800 million to produce a 40,000tpa synthetic graphite anode material facility in Georgia, USA with plans to expand to 150,000tpa by 2030.

Syrah Resources leads the West’s attempt to build an ex-China flake graphite and anode material supply chain

Magnis Energy Technologies is working towards becoming a graphite producer, anode materials producer and is already a small scale JV battery producer in the USA

Closing remarks

The Western world received a loud wake-up call the past week. The China graphite products ‘export permits’ may only serve to restrict or slow down some anode material supply from China, but it puts the West on notice of how dependent they are upon China.

Given the world is rapidly moving to electric vehicles, the West must urgently build up its EV materials supply chains or risk being left behind in the global EV race.

The USA is making some bold moves and the companies discussed in this article are moving in the right direction. Let’s just hope that the western EV supply chain build out accelerates rather than stalls like GM’s latest electric pickup truck plans. I think Americans will want U.S.-branded electric cars and I know Europeans will want European branded electric cars. If we are not careful our only choice one day might be Tesla and Chinese electric cars. Stay tuned.

In a recent episode of InvestorNews, Tracy Weslosky sat down with Eric Desaulniers, MSc, Géo, President & CEO of Nouveau Monde Graphite Inc. (NYSE: NMG | TSXV: NOU), to discuss China’s surprising decision to implement export permits for certain graphite products starting December 1st. Eric remarked, “Waking up to this news was unexpected, but not entirely surprising. China’s decision to restrict the export of battery materials, starting with graphite, comes sooner than many experts anticipated.”

With the booming demand for electric vehicles, which require five times more graphite than any other critical mineral, Tracy delved into the implications of China’s move on graphite supply. Eric highlighted China’s dominant position, controlling nearly 100% of natural graphite processing. “This strategic decision by China impacts many companies in the U.S. that are scaling up cell production,” he said. He was proud to mention that Nouveau Monde stands out, developing one of the largest and most sophisticated natural graphite operations outside of China.

The changing dynamics are also influencing Nouveau Monde’s partnerships, particularly with giants like Panasonic. The recent developments have intensified their ongoing discussions. As Eric pointed out, the challenge will be detaching from China’s supply chain, especially amid skyrocketing cell production demand. “Our goal is to be a viable alternative, and this current pricing scenario outside China underscores the need for that,” Eric emphasized.

To access the complete interview, click here

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About Nouveau Monde Graphite Inc.

Nouveau Monde Graphite is striving to become a key contributor to the sustainable energy revolution. The Company is working towards developing a fully integrated source of carbon-neutral battery anode material in Québec, Canada, for the growing lithium-ion and fuel cell markets. With enviable ESG standards, NMG aspires to become a strategic supplier to the world’s leading battery and automobile manufacturers, providing high-performing and reliable advanced materials while promoting sustainability and supply chain traceability.

To know more about Nouveau Monde Graphite Inc., click here

Disclaimer: This interview, which was produced by InvestorNews Inc. (“InvestorNews”), does not contain, nor does it purport to contain, a summary of all material information concerning the Company, including important disclosure and risk factors associated with the Company, its business and an investment in its securities. InvestorNews offers no representations or warranties that any of the information contained in this interview is accurate or complete.

This interview and any transcriptions or reproductions thereof (collectively, this “presentation”) does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for or purchase any securities in the Company. The information in this presentation is provided for informational purposes only and may be subject to updating, completion or revision, and except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any information herein. This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation. Forward-looking statements are based on the opinions and assumptions of the management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. This presentation should not be considered as the giving of investment advice by the Company or any of its directors, officers, agents, employees or advisors. Each person to whom this presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. Prospective investors are urged to review the Company’s profile on SedarPlus.ca and to carry out independent investigations in order to determine their interest in investing in the Company.

Recent developments from China’s Ministry of Commerce concerning export permits on critical graphite products have sent ripples through the financial markets. Graphite, indispensable for electric vehicle (EV) batteries, is now under tighter control by China, a country that dominates its global production.

Troy Grant of Elcora Advanced Materials Corp. (TSXV: ERA) highlights,

“Graphite content in an electric vehicle exceeds the demand for any other critical mineral fivefold. We’ve observed China make similar business maneuvers with rare earths, germanium, gallium, and now graphite. This trajectory was anticipated. While I concur with CMI’s Jack Lifton on lithium or cobalt possibly being next, we shouldn’t overlook vanadium.”

According to Critical Minerals Institute (CMI) Director Matt Bohlsen out of Australia early AM,

“The EV boom is creating a surge in demand for graphite… Each fully electric car battery has between 60-100kgs of graphite. China’s proposed ‘export permits’ will likely lead to a shortage of spherical and synthetic graphite outside of China, underscoring the world’s vulnerability to China’s supply disruption of critical minerals.”

Investors are now unquestionably watching stocks that might benefit the global market in light of the challenges presented by yet another China C Critical Mineral export ban. Here are five stocks that we were researching this morning (listed by market cap):

1: Syrah Resources Limited (ASX: SYR) – Market Cap: AUD$307.53M* — Syrah is an Australian Securities Exchange listed industrial minerals and technology company with its flagship Balama Graphite Operation in Mozambique and a downstream Active Anode Material Facility in the United States. Syrah’s vision is to be the world’s leading supplier of superior quality graphite and anode material products, working closely with customers and the supply chain to add value in battery and industrial markets.

2: Talga Group Ltd. (ASX: TLG) – Market Cap: AUD$353.53M* — Talga Group Ltd. is building a European battery materials supply chain to offer products critical to the green transition. Talga’s innovative technology and vertical integration of 100% owned Swedish graphite resources provides security of supply and creates additional value for stakeholders.

3: Zentek Ltd. (NASDAQ: ZTEK | TSXV: ZEN) – Market Cap: USD$128.24M*

Zentek is an ISO 13485:2016 certified intellectual property technology company focused on the research, development and commercialization of novel products seeking to give the Company’s commercial partners a competitive advantage by making their products better, safer, and greener.

Zentek’s patented technology platform ZenGUARD™, is shown to have 99-per-cent anti-microbial activity and to significantly increase the bacterial and viral filtration efficiency of both surgical masks and HVAC (heating, ventilation, and air conditioning) systems. Zentek’s ZenGUARD™ production facility is located in Guelph, Ontario.

Zentek has a global exclusive license to the Aptamer-based platform technology developed by McMaster University which is being jointly developed Zentek and McMaster for both the diagnostic and therapeutic markets.

Zentek is also the 100% owner of Albany Graphite Corp. (AGC).  AGC’s recently filed 43-101 Mineral Resource Estimate shows circa 1,000,000 tonnes of graphite in Ontario.  Importantly, that graphite is volcanic of origin, and globally unique. It is expected that graphite from AGC will perform better in EV batteries than other materials because of the volcanic origin.

4: Nouveau Monde Graphite Inc. (NYSE: NMG | TSXV: NOU) – Market Cap: USD$159.6M*

Nouveau Monde Graphite is striving to become a key contributor to the sustainable energy revolution. The Company is working towards developing a fully integrated source of carbon-neutral battery anode material in Québec, Canada, for the growing lithium-ion and fuel cell markets. With enviable ESG standards, NMG aspires to become a strategic supplier to the world’s leading battery and automobile manufacturers, providing high-performing and reliable advanced materials while promoting sustainability and supply chain traceability.

5: Northern Graphite Corporation (TSXV: NGC | OTCQB: NGPHF) – Market Cap: CAD$28.6M*

Northern is a Canadian, TSX Venture Exchange listed company that is focused on becoming a world leader in producing natural graphite and upgrading it into high value products critical to the green economy including anode material for Lithium-Ion batteries/EVs, fuel cells and graphene, as well as advanced industrial technologies.

Northern is the only graphite producing company in North America and will become the third largest producer outside of China when its Namibian operations come back online. The Company has the large scale Bissett Creek development project in Ontario that will be a source of continued production growth in the future.  All projects have “battery quality” graphite and are located close to infrastructure in politically stable jurisdictions.

(*) Market cap figures were sourced from the ASX, TSX, and Yahoo Finance Boards as of market opening on Friday, October 20, 2023. The listed market caps are in millions.

Amid these market shifts, it is pivotal for investors to stay updated and understand the dynamics affecting graphite and related stocks in the critical minerals sector. As China tightens its control over graphite exports, these companies and the wider EV sector will be in sharp focus, making it a space to watch closely in the coming months.

Reports continue to emerge that the graphite market may be next to boom. This is due to accelerating strong demand from the EV battery sector and limited new supply in the pipeline.

The 2021 International Energy Agency (“IEA”) report highlighted that the world will need between 8 and 25x more flake graphite from 2020 to 2040. This is supported by my recent Trend Investing forecast of a 17x increase in flake graphite demand from 2020 to 2037.

In December 2022 Fastmarkets stated: “An impending graphite shortage, driven by phenomenal demand growth from the EV battery sector and delays to new capacity…..will all lead to significantly higher graphite prices in the coming years.”

Trend Investing v IEA demand forecast for EV metals

Source: Trend Investing & IEA

The graphite mining leaders

There are a number of leading Chinese graphite mining companies (Aoyu Graphite Group, BTR New Energy Materials, Qingdao Black Dragon, National de Grafite, Shanshan Technology, and LuiMao Graphite); however, they are not typically accessible to most western investors.

Syrah Resources Limited (ASX: SYR | OTC: SYAAF) is the leading western graphite producer. They source their graphite from their 100% owned and massive Balama graphite mine in Mozambique. Syrah is currently constructing their active anode materials (“AAM”) plant at their Vidalia facility in Louisiana, USA. The facility has initial plans for 11.25ktpa of AAM and then to expand to 45ktpa AAM. The first stage 11.25ktpa AAM is targeted to start production in the September quarter of 2023. Tesla (NASDAQ: TSLA) signed an off-take agreement for an initial 8ktpa of AAM which was recently expanded to an additional 17ktpa AAM of off-take (see Dec. 23, 2022 news).

Other graphite producers include Ceylon Graphite Corp. (TSXV: CYL | OTCQB: CYLYF) with production in Sri Lanka, Mineral Commodities Ltd. (ASX: MRC) who own 90% of Skaland Graphite which operates the highest grade flake graphite operation in the world and largest producing mine in Europe, Tirupati Graphite PLC’s (LSE: TGR) project in Madagascar, and Northern Graphite Corporation (TSXV: NGC | OTCQB: NGPHF) with their Lac des Iles producing graphite mine in Quebec and the Okanjande graphite deposit/Okorusu processing plant in Namibia.

Some junior graphite miners

There are several junior graphite miners but those with the more advanced stage projects are NextSource Materials Inc. (TSX: NEXT | OTCQB: NSRCF), Talga Group Ltd. (ASX: TLG), Westwater Resources Inc. (NYSE: WWR), Nouveau Monde Graphite Inc. (NYSE: NMG |, TSXV: NOU), Triton Minerals Limited (ASX: TON), (TSXV: LEM | OTCQB: LEMIF), Lomiko Metals Inc. (TSXV: LMR | OTCQB: LMRMF), and Renascor Resources (ASX: RNU).

Closing remarks

The graphite miners have not yet taken off due to subdued graphite prices and ample supply in recent years; however, this looks set to start changing from 2023 onwards especially if the EV boom continues to do well. The flake graphite miners that can also move to make valued added active anode materials (spherical graphite) look set to capture even greater profits. There is also the synthetic graphite producers such as Novonix (ASX: NVX) (Nasdaq: NVX), the future graphite recycling companies such as Elcora Advanced Materials Corp. (TSXV: ERA | OTCQB: ECORF), and the graphene companies such as Zentek Ltd. (NASDAQ: ZTEK | TSXV: ZEN)….. but that’s for another discussion next time.

The flake graphite sector does not get as much attention as lithium, yet the demand wave coming is also very significant. For example, in 2021 the International Energy Agency forecast that flake graphite demand could grow between 8x to 25x from 2020 to 2040. Benchmark Mineral Intelligence forecasts we need 97 new (56,000tpa) natural flake graphite mines from 2022 to 2035.

The calm before the storm

More recently in October 2022, Fastmarkets stated:

“Fastmarkets has forecast that demand for graphite from the battery sector in 2022 will rise by 40% year on year, in line with growth in the EV sector……We expect to see the graphite market tip back into deficit in late 2022…….Graphite prices are in a lull, but this lull will prove to be temporary and may well be the calm before the storm.”

Note: Bold emphasis by the author.

An 8 to 25x increase in demand, 97 new graphite mines, graphite deficit coming in late 2022! Yet no one is talking about graphite. Today we cover the main western graphite producers and touch on a few promising near term graphite producers, noting China currently dominates the graphite and anode sectors.

The western flake graphite leading producers

Syrah Resources Limited (ASX: SYR) – Syrah is an Australian company and one of the world’s largest flake graphite producers from their Balama graphite mine in Mozambique. Syrah is also working towards becoming a vertically integrated producer of Active Anode Materials (“AAM”) at their Vidalia facility, Louisiana, USA. In some exciting recent news for shareholders, Syrah was selected for a U.S Department of Energy grant of up to US$220 million towards their Vidalia facility expansion (initial production targeted to begin in Sept. quarter 2023). This comes on top of the news late in 2021 that Syrah signed a four year deal to supply graphite anode materials to Tesla. Syrah also recently signed an MOU with Ford and SK On as well as an MOU with LG Energy Solution. Clearly, Syrah Resources is in the box seat to become a critical supplier of both graphite and active anode materials this decade, especially for western OEMs.

The following companies are smaller scale western flake graphite producers:

• Advanced Metallurgical Group NV (AMS: AMG | OTC: AMVMF) – Is a diversified producer of critical metals. They mostly produce lithium and vanadium, but also some high purity natural graphite production.
• Ceylon Graphite Corp. (TSXV: CYL | OTCQB: CYLYF) – Produces graphite from their ‘vein graphite’ mine in Sri Lanka.
• Mineral Commodities Ltd. (ASX: MRC) – State they have the “world’s highest-grade operating flake graphite mine with mill feed grade averaging ∼25%C”. Also that they are “the biggest crystalline graphite producer in Europe and the fourth largest producer globally outside of China and accounts for around 2% of global annual natural flake graphite production” at their Skaland Graphite Operation in Norway. They also own the Munglinup Graphite Project in Western Australia and have received Critical Minerals Grant funding to build a pilot scale battery anode plant in Australia.
• Northern Graphite (TSXV: NGC | OTCQB: NGPHF) – Recently completed the purchase from Imerys of the Lac des Iles producing graphite mine in Quebec and the Okanjande graphite deposit/Okorusu processing plant in Namibia. They also own the Bissett Creek graphite project located 100km east of North Bay, Ontario, Canada and the nearby Mousseau West Graphite Project.
  

Near term western potential flake graphite producers

• NextSource Materials Inc. (TSX: NEXT | OTCQB: NSRCF) – Completion of construction activities and the start of mining activities is expected in November 2022, at their Molo Graphite Project in Madagascar. Phase 1 of the Molo Mine is designed to operate at a production capacity of 17,000 tonnes per annum.
  
• Westwater Resources Inc. (NYSE: WWR) – Owns the Coosa Graphite Plant (2023 production start targeted) in USA. The Company plans to source natural graphite initially from non-China suppliers and then from the USA from 2028.
• Nouveau Monde Graphite Inc. ( NYSE: NMG | TSXV: NOU ) (“NMG”) – Own the Matawinie graphite project, located in Quebec, Canada. In September this year it was announced that Tesla had recently visited their project in Quebec. Also recently the Company announced: “NMG, Panasonic Energy and Mitsui announce Offtake and Strategic Partnership supporting the supply of active anode material plus US$50 million private placement by Mitsui, Pallinghurst and Investissement Québec.”
• Lomiko Metals Inc. (TSXV: LMR | OTCQB: LMRMF) – Earlier stage but 100% owns the promising La Loutre Graphite Project in Québec, Canada, where a PEA has been completed.
  

Closing remarks

An 8 to 25x increase in demand by 2040, 97 new graphite mines needed by 2035, graphite deficit coming in late 2022! Investors should not forget about graphite, and particularly focus on those graphite miners that are working towards being able to manufacture value-added active anode materials (spherical graphite), as that is where the real money is.

We may be experiencing ‘the calm before the storm’ (before graphite deficits push up prices), which means the sector still offers many great opportunities for investors.

Disclosure: The author is long Syrah Resources (ASX: SYR) and Advanced Metallurgical Group NV (AMS: AMG).