Northern Graphite to benefit from soaring battery demand

2023-02-28

Feb. 27, 2023 - Another 150 battery gigafactories are in the wings but there will not be enough battery mineral mines built in time. Graphite is the largest component of batteries and Northern Graphite is expected to be positioned to benefit from growing graphite production.

Lithium prices have soared and many related stocks as well. It seems to me, that likely many younger investors have a belief that lithium-ion batteries for EVs is all about lithium. In reality, lithium only makes up about 8.0% of a battery while manganese is 12%, nickel 21%, and graphite a whopping 48%.

The biggest supply constraint is believed to be graphite because not nearly enough investment capital has been applied here like lithium.

“Demand for anodes grew by 46% in 2022, compared to a 14% growth in supply for flake graphite. In 2022, the lithium-ion battery anode market became the biggest end-market for natural flake graphite, overtaking the traditional industrial applications including refractory and foundry industries, which will see graphite market fundamentals and pricing increasingly be controlled and guided by the battery market. “

“This supply/demand imbalance during 2022 caused prices for -100 mesh flake graphite to rise by 25%, a trend which Benchmark anticipates to continue into 2023 on the back of incremental supply-side expansions in comparison to surging demand from the anode sector.”

The other anode supply is synthetic graphite which is mostly made in China, but it is not very environmentally friendly. As a feedstock, they use petroleum or coal coke, but then it must be heated to very high temperatures.

Fossil fuel furnaces were not capable and the process could not be done until electrical arc furnaces were made to make the synthetic graphite they run at temperatures from about 2300 to 3000 degrees Celsius.

This is very energy intensive and the feed-stock, coke prices have risen substantially. Demand for this is high too as synthetic graphite anode supply grew by more than 30% during 2022, mostly supplying China battery makers.

China produces around 65% to 70% of the world's mined graphite supply, so a producer in the Americas or Europe is going to be looked at more favorably given geopolitical issues with China as well as the move away from China to resolve supply chain issues.

Another important aspect of graphite mining is to work with spherical coated graphite (SPG) or battery anode material (BAM) manufacturers to make your product viable for the battery market.