2023 has been a rough year for all the EV materials and graphite was no exception. EV battery anodes contain a combination of spherical graphite (sourced from natural flake graphite) and synthetic graphite. Today we take a look at the key trends of 2023 and what we can expect in 2024 and beyond.

2023 graphite trends

A slowdown in the growth rate of EV sales in China along with less demand from the steel industry were mostly to blame for the graphite demand slowdown when compared to 2022. The other key factor was the excess anode capacity that came online during the 2022 China EV boom when EV sales skyrocketed.

China flake graphite prices fell throughout 2023 and have recently risen slightly from their bottom at ~US$550/t. China’s uncoated spherical graphite prices fell to US$2,200/t due to excess supply. China’s synthetic graphite prices were also weaker in 2023, due to slower demand.

A trend in 2023 was the increase in the popularity of synthetic graphite for use in battery anodes, particularly in China. Synthetic graphite prices have typically been much higher than flake graphite prices due to the high energy intensity needed to produce synthetic graphite. However falling energy input costs in 2023 and new capacity resulted in lower synthetic graphite prices and prices much closer to flake graphite. This led to anode producers increasing the ratio of synthetic graphite to spherical graphite in their anodes, and less demand for spherical and flake graphite.

Then in November 2023, the European Union added synthetic graphite to its list of critical materials as part of their Critical Raw Materials Act (“CRMA”).

Finally, in late 2023, China introduced temporary export permits for some graphite products (natural flake graphite, spherical graphite, & synthetic graphite) to apply from December 1, 2023. This has resulted in some recent price increases in the graphite market and a large amount of uncertainty around graphite products supply outside of China. China controls 75% of the global graphite anode supply chain.

The outlook for graphite in 2024

Most analysts are forecasting a fairly balanced graphite market in 2024, with the possibility of some price recovery from the 2023 cyclical lows. UBS tips graphite prices to surge 50% from the 2023 lows and has set its long-term flake graphite price at $850/t. UBS forecasts natural graphite demand rising by six times this decade to reach a demand of 6.3 million tonnes pa, with a deficit forming from 2025.

Others such as Macquarie Research are forecasting graphite deficits to begin in 2024 and increase each year to 2030.

Macquarie Research (as of March 2023) forecasts flake graphite deficits starting in mid 2024

The long-term outlook for graphite

Looking out further graphite demand is set to surge this decade and next due to the expected massive rise in global EV sales and energy stationary storage (“ESS”) battery demand. Below are 3 demand forecasts that give a guide as to what may happen over the long term.

• Benchmark Mineral Intelligence forecasts we will need 97 new 56,000tpa natural flake graphite mines from 2022 to 2035 to meet surging demand.
• The IEA forecasts flake graphite demand to rise 8-25x from 2020 to 2040.
• Trend Investing forecasts flake graphite demand to rise 17x from 2020 to 2037.

Trend Investing forecasts flake graphite demand to increase 17x from 2020 to 2037. The IEA forecasts a 8-25x increase from 2020 to 2040

Closing remarks

While 2023 has been a very tough year for the graphite sector the future looks much brighter, especially beyond 2025 when possible deficits are forecast to increase each year. For now, the flake graphite miners that are low-cost producers and who can develop integrated ‘flake to spherical graphite’ production stand to perform best. Several western graphite companies are rapidly advancing in this direction and are worth following closely.

Those graphite miners that can qualify their product to meet the IRA and/or the CRMA should also be at an advantage, especially with the U.S. Foreign Entity of Concern (“FEOC”) rules for critical materials commencing in 2025.

We will keep you updated on the graphite sector and miners in 2024.

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.

June 21, 2018 – “When you look at graphite and you look at its conductivity, its thermal abilities and its hardness, it cannot be replaced by any other material. We have to work with the governments, which we are doing right now. We have to work with the engineers, which we are doing right now. And we have to work with the end-user to understand what they need because right now we are sitting on the cusp of something that is going to happen and it is called the battery revolution.” states Paul Gorman, CEO of NovoCarbon Corp. (TSXV: GLK | OTCQB: GLKIF), in an interview with InvestorIntel Corp. CEO Tracy Weslosky.

Tracy Weslosky: Paul, NovoCarbon is going to be the only producer of spherical graphite in North America. Did I get that right?

Paul Gorman: You did get that right. We have spent a lot of time, a lot of energy, and a lot of money to get to where we are today under the NovoCarbon banner to be able to produce a material for battery manufacturers here in North America.

Tracy Weslosky: I am going to back you up because not all of us understand what spherical coated graphite is. Help me understand this.

Paul Gorman: It is simple. I mean, a cupcake is a cupcake with icing and frosting on it. How do you get to that point? You need bakers. You need icing. You need a way to deliver that cupcake and it has got to be consistent every time or your customers are not going to buy it. We are in the business of providing a quality material that is spherinized, shaped, and coated for an anode powder. If you cannot make a cupcake you are out of business and that is all we do. It is basically baking and knowing how to do it. 

Tracy Weslosky: I love this. This is a metaphor I can understand. Let us also then discuss the end-users, the offtake agreements. Targets then would be what, the battery makers?

Paul Gorman: The battery makers are where we are targeting. Mega factories are being built around North America right now. We are taking advantage of what we started 4 years ago, which was to qualify and sample material that we get as feedstock from Brazil, bring it in, and show it to the customers. When they actually go through their engineering process the clock starts. $2 million dollars later and 3 years later we are now at the point we are actually qualifying and sampling with the big makers here. We are very happy because there is no other competition that stands in our way.   

Tracy Weslosky: Let us discuss one of the other critical aspects of these critical materials, which is, of course, the Chinese are producing 80%, Trump is talking to everybody about sustainability and getting it out of North America. Obviously this would be impacting you and your shareholders positively or so I am guessing.

Paul Gorman: Absolutely. The value is there. We need the miners to mine the feedstock. We need the battery companies to be successful in building batteries. We are such a small part of that, but we are a very important part of that. When you look at graphite and you look at its conductivity, its thermal abilities, and its hardness, it cannot be replaced by any other material. We have to work with the governments, which we are doing right now. We have to work with the engineers, which we are doing right now. And we have to work with the end-user to understand what they need because right now we are sitting on the cusp of something that is going to happen and it is called the battery revolution…to access the complete interview, click here

Disclaimer: NovoCarbon Corp. is an advertorial member of InvestorIntel Corp.