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.

I have some recurring themes that I tend to write about. I have no idea if people like them or not so I will continue along in my own little vacuum and hope that at least some readers out there find the same things interesting that I do.

One of those themes I like to revisit is clean, sustainable resource acquisition. By that I mean, we can’t just pillage the earth for all the critical battery metals we require simply because it’s a means to an end….well, we can, and currently we do. But I feel that at some point in time, there will be as much scrutiny on how we source these materials as there is on phasing out fossil fuels and reducing overall carbon emissions. At least I’d like to think that’s the case, but who knows if policymakers will take that next step. To me, it seems the end goal of a greener economy is kind of pointless if we don’t look at the whole picture.

Bottom line, in my opinion, we need to be just as concerned about where and how we are acquiring all the copious amounts of raw materials required to transition to a cleaner, greener future or we’re simply trading in one problem for another. Whether companies are recognized for this today, or not for some time to come, I strongly believe they will eventually be rewarded.

That brings me to Nouveau Monde Graphite Inc. (NYSE: NMG | TSXV: NOU), a Québec-based company 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 lithium-ion battery and fuel cell markets, and other value-added graphite products. With excellent ESG standards, the Company aspires to become a strategic supplier to the world’s leading battery and auto manufacturers, providing high-performing and reliable advanced materials while promoting sustainability and supply chain traceability.

The Company’s activities are focused on the planned Matawinie graphite mine and the planned commercial value-added Bécancour Battery Materials Plant, both of which are progressing concurrently toward commercial operations.

The Matawinie graphite property, owned 100% by the Company, consists of 246 mining claims spanning 13,214 hectares, located around 120 km north of Montréal, Québec. An updated feasibility study for this property indicates an annual processing rate of 2.55 million metric tonnes and average annual graphite production of 103,328 metric tonnes. In 2018, the Company began operating a demonstration plant in Saint-Michel-des-Saints to validate the quality and processes of its graphite products, and to serve as a foundation for its Phase-2 battery material plants. Nouveau Monde has initiated steps towards making the Matawinie Mine one of the first all-electric open-pit operations globally, working in collaboration with Caterpillar and governments to achieve electrification in mining and aiming to reduce over 300,000 tonnes of CO2 emissions over the mine’s lifespan.

At the same time, Nouveau Monde is progressing with its Battery Material Plant Project, producing spherical graphite at its Phase-1 facility, and leveraging a proprietary thermochemical purification process to yield graphite with purity levels surpassing 99.95%. The Company has a partnership with Olin Corporation for operational support and raw material supply, and has set up pilot plant purification modules at Olin’s Bécancour, Québec facility. Nouveau Monde owns land in Bécancour to build its own manufacturing plant, projected to produce approximately 46,000 tpa of advanced graphite materials. This is further strengthened by the Québec Government’s battery hub strategy, which has attracted significant industrial players to the area. The Company’s current commercial plans for its Phase-2 Bécancour Battery Material Plant are being advanced in line with a recent Feasibility Study.

Nouveau Monde’s latest quarterly operational update provides valuable insights into the progress being made on both fronts. The Company announced significant advancements in the development of its fully integrated value chain, with the aim of becoming one of the largest natural graphite sources in North America. As the company approaches its Phase-2 development, emphasis is being placed on securing optimal multiyear sales agreements, finalizing technical parameters for the Bécancour Battery Material Plant, enhancing commercial visibility, and ensuring long-term shareholder value. Collaborative testing is ongoing at the Company’s Phase-1 plants alongside potential customers, aiming to optimize process efficiency, inform Phase-2 facility plans, and mitigate risks. Significant partnerships have been established, including a technology collaboration with Caterpillar and a potential long-term agreement with Panasonic Energy. The Company secured US$22 million in a bought deal financing in April to finish Q2 with a cash position of C$59.8 million, while continuing to engage with governmental agencies to optimize project financing.

Despite a slower start to EV sales in 2023, the market saw a 36% YoY increase with further growth expected in the latter part of 2023. Benchmark Mineral Intelligence forecasts the global production capacity of lithium-ion batteries to reach 8,930 GWh by 2030, suggesting a significant growth in demand for battery materials, including graphite. Nouveau Monde’s comprehensive production model and strategic advantages, such as carbon-neutrality and regional benefits, place the company in a favorable position to cater to Western markets looking to decrease dependence on Chinese suppliers. It’s not just enough to supply a critical material anymore, it needs to be done sustainably.

Nouveau Monde Graphite Inc. trades at a market cap of C$235 million.