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.

Jack Lifton interviews CEO and Director Belinda Labatte on an update on Lomiko Metals Inc. (TSXV: LMR | OTCQB: LMRMF). In this compelling conversation with Jack, Belinda participates in a discussion on not only Canada’s vision for the competitive development of an EV supply chain, but the competitive advantages of the Quebec graphite industry.

In this InvestorIntel interview, which may also be viewed on YouTube (click here to subscribe to the InvestorIntel Channel), Belinda Labatte pointed out the fragility of the present graphite supply chain in North America given that “100% of the processing of graphite occurs in China and about 90% of the material comes from China.” Highlighting the huge demand for graphite in Quebec and the rest of North America, Belinda went on to also provide an update on Lomiko’s UL ECOLOGO® certification for mineral exploration to validate Lomiko’s responsible business practices.

To watch the full interview, click here

About Lomiko Metals Inc.

Lomiko Metals has a new vision and a new strategy in new energy. Lomiko represents a company with purpose: a people-first company where we can manifest a world of abundant renewable energy with Canadian and Quebec critical minerals for a solution in North America. Our goal is to create a new energy future in Canada where we will grow the critical minerals workforce, become a valued partner and neighbour with the communities in which we operate, and provide a secure and responsibly sourced supply of critical minerals.

The Company holds a 100% interest in its La Loutre graphite development in southern Quebec. The La Loutre project site is located within the Kitigan Zibi Anishinabeg (KZA) First Nations territory. The KZA First Nations are part of the Algonquin Nation and the KZA territory is situated within the Outaouais and Laurentides regions.​ Located 180 kilometres northwest of Montreal, the property consists of 1 large, continuous block with 48 minerals claims totaling 2,867 hectares (28.7km²). Lomiko Metals published a Preliminary Economic Assessment (“PEA”) on September 10, 2021 which indicated the project had a 15-year mine life producing per year 100,000 tonnes of the graphite concentrate at 95%Cg or a total of 1.5Mt of the graphite concentrate. This report was prepared as National Instrument 43-101 Technical Report for Lomiko Metals Inc. by Ausenco Engineering Canada Inc., Hemmera Envirochem Inc., Moose Mountain Technical Services, and Metpro Management Inc., collectively the Report Authors. The Bourier project site is located near Nemaska Lithium and Critical Elements south-east of the Eeyou Istchee James Bay territory in Quebec which consists of 203 claims, for a total ground position of 10,252.20 hectares (102.52 km2), in Canada’s lithium triangle near the James Bay region of Quebec that has historically housed lithium deposits and mineralization trends.

Did you know that ‘graphite’ is on the list of 35 U.S critical minerals? It is because graphite is important in steel manufacturing and also in batteries. An average sized electric vehicle (“EV”) lithium-ion battery typically has about 55 kgs of graphite, larger size EVs can use 75-115 kgs per vehicle. This is why in 2016 Elon Musk famously said: “Our cells should be called Nickel-Graphite, because primarily the cathode is nickel and the anode side is graphite with silicon oxide.”

Graphite demand is set to soar this decade as EVs takeoff

Source: Northern Graphite company presentation

Today’s company has recently signed a company changing deal that will see them soon become a North American graphite producer, assuming the deal finalizes.

Northern Graphite to acquire two graphite mines from Imerys Group

Northern Graphite Corporation (TSXV: NGC) announced on December 2, 2021: “Northern Graphite to acquire two graphite mines from Imerys Group.”

The two graphite mines are the Lac des Iles, producing graphite mine in Quebec, Canada, and the Okanjande graphite deposit/Okorusu processing plant in Namibia. The purchase price is approximately US$40 million. Northern Graphite plans to fund the deal and raise extra working capital, according to a term sheet with Sprott Resource Streaming and Royalty Corp., through US$40 million in debt/royalty/stream financing plus a US$15 million (~C$20 million) private placement equity raise.

Northern Graphite CEO, Gregory Bowes, stated: “This is a truly transformational deal that will elevate Northern from one of over 20 junior graphite companies looking for project financing to being the only North American and the world’s third largest¹ non-Chinese graphite producing company.”

Note: Bold emphasis by the author.

Northern Graphite’s existing graphite project

Northern Graphite owns the Bissett Creek Graphite Project located 100km east of North Bay, Ontario, Canada and close to major roads and infrastructure. The Company has completed an NI 43-101 Bankable Feasibility Study and received its major environmental permit. The next step is project financing. More details on the Bissett Creek project here.

Northern Graphite’s company goal and strategy

Northern Graphite is focused on becoming a world leading producer of natural graphite and on the upgrade of mine concentrates into high value products critical to the green energy revolution including lithium-ion battery anode material for EVs and stationary power systems, fuel cells, and graphene, as well as advanced industrial technologies. The upgrading of mine concentrates usually means upgrading flake graphite (sells at ~US$550-1,000/t) to active coated spherical graphite (sells at ~US$7,000+/t). Northern Graphite is not yet at this stage, but it is their plan to go in that direction, which makes good business sense, to increase profit margins. Manufacturing and selling graphene is another way to add value.

Source: Northern Graphite company presentation

Closing remarks

Northern Graphite has made a company changing deal by purchasing two graphite mines (and a processing plant) for only ~US$40 million. Combine this with their existing advanced stage Bissett Creek graphite Project, and Northern Graphite will own 3 graphite projects/mines, two in Canada and one in Namibia.

A key to the new acquisition is that the Quebec based Lac des Iles Mine is already a producing asset. The Okanjande is a fully operational, permitted, mine in Namibia (currently on care and maintenance). With graphite demand set to surge this decade as electric vehicles takeoff, the timing of the recent acquisition could not be any better and propels Northern Graphite from being a junior to being a North American graphite producer. Or as the company states: “Northern will become the only North American, and the world’s third largest non-Chinese, graphite producing company.”

The deal still needs to go through the usual approvals but is expected to finalize soon. Higher graphite prices are needed in the sector to make it more profitable; however, this may happen in 2022 as flake graphite is expected to move into deficit. Also, note the higher sovereign risk for the Namibia operation.

Northern Graphite Corporation trades on a market cap of only C$69 million. One to follow closely in 2022.