Panellists at IM’s Graphite 2011 conference held in London, UK last month, have cautioned that emerging producers are relying too heavily on a boom in demand for lithium-ion (Li-ion) batteries and other high-tech uses to justify investments into new capacity, saying traditional uses are still attractive markets.
Stephen Riddle of Asbury Graphite Mills Inc. put questions to Mark Muzzin of Strategic Energy Resources; Don Baxter of Northern Graphite; Julian Norley of GrafTech International Holdings; and Colin Cooper of Graphexel Ltd on their opinions of the changing graphite industry.
Graphexel’s Cooper told delegates that new technologies were unlikely to overtake the graphite market demand for traditional end uses - such as refractories, metal casting, and lubricants - as the fundamental need for graphite in these lower value sectors was not “going away”.
But Cooper concurred that the market for new high-tech uses was not all hype, saying the markets had already achieved commercial success.
GrafTech’s Norley agreed, commenting: “Smart phones, and new energy storage methods, are a reality - and future demand for these items is very promising.”
Muzzin, the managing director of Australian graphite developer Strategic Energy Resources, added: “The high-tech market is there, but graphite needs to play catch-up with lithium in terms of its image in this sector. Graphite is the poor cousin to lithium, but its usage in batteries is far bigger.”
A delegate representing refractories group Vesuvius asked the panel if emerging graphite juniors would continue to work with “old industries” or if their focus was solely on new applications such as Li-ion batteries.
Graphexel’s Cooper stated: “A consumer is a consumer. Even so-called traditional markets have a long way to go to improve existing product mixes.”
Prices to impact traditional markets?
Turning to the issue of prices - which for flake graphite grades have increased significantly since mid-2010 - Riddle asked the panellists if traditional graphite consumers would be willing to pay the higher costs.
Several producers said that they were starting to see increased partial replacement for graphite, with Muzzin revealing he had observed Chinese refractory companies using graphite blends to lower their raw material costs.
Graphexel’s Cooper summarised: “Traditional consumers will pay these prices because they have to. Consumers may attempt to substitute or become more efficient to reduce graphite usage, but they will all have to pay higher prices.”
“The days of cheap graphite are over,” Baxter of Northern Graphite concurred. “But as an emerging producer we don’t want prices to jump too high and risk customers moving to substitutions.”
“Build it and they will come”
One junior explorer with both feet firmly in the Li-ion camp is Bissett Creek developer Northern Graphite, whose CEO Greg Bowes cited a ‘Field of Dreams’ scenario for flake graphite deposits, suggesting that if new operations are built, people will purchase the material.
Bowes predicted that a boom in the Li-ion battery market would drive significant demand for flake graphite, which is processed to make spherical graphite consumed in batteries, and that new operations will need to be developed to meet it.
“It’s the Field of Dreams of scenario. Supply itself will generate demand. People will use [flake graphite] if they can get it,” said Bowes.
“In order to keep in line with EV market projections alone, graphite production has to double. Over 50% of new natural graphite production will not be suitable for lithium-ion batteries,” Bowes warned.
Citing a table compiled by Canaccord Research, Bowes forecast that 2.74m tonnes of flake graphite will be required by 2020, assuming a market penetration of 20% for the EV market, and 25% for the hybrid electric vehicle market. Around three tonnes of flake graphite are required to produce one tonne of spherical graphite.
He explained that, at present, annual flake graphite production is just 400,000 tonnes.
Despite Bowes’ forecasts of a boom in flake graphite demand, it must be considered that, where required, synthetic graphite can also be utilised in battery anodes at a relatively similar cost to flake.
Delegates at the conference warned that end users could turn to synthetic graphite if flake graphite juniors fail to bring their operations online in time with increased demand, which could result in an oversupply situation with flake material.
Bowes concluded, however, that: “Even without the projected EV booms, we need new graphite mines. We need lots of new mines. Graphite is part of the commodity super-cycle.”
Graphite image needs “promotion”
While graphite’s role in the potential Li-ion battery boom is acknowledged, the mineral has not received the same attention as lithium in the media coverage of battery developments.
Analysts believe graphite is the best choice now available as a precursor for Li-ion battery anodes for electric vehicles, owing to its electrical and thermal properties, abundance, a high reversible capacity and its low irreversible capacity.
“People are starting to realise that existing markets are not the be all and end all,” George Hawley, president of George C. Hawley & Associates consultancy said.
Hawley pointed out that in addition to battery anode applications, graphite could also be a key mineral in new energy sources (nuclear, solar, wind and wave/tidal), new energy storage devices (fuel cells, flow battery bipolar plates, and supercapacitors), and energy control applications (building envelope, fire protection, oil and solvent spill management, resistive de-icing, and composites).
“We need to get the message out. We need to do some research as an association rather than relying on the crumbs from the table from Superior [Graphite] and GrafTech,” Hawley commented.
Gary Economo, CEO of Lac Knife graphite and graphene developer Focus Metals, outlined: “I can say with certainty that the graphite market is changing and these changes are going to drastically alter mine to market strategies and realisations.”
“Graphite’s evolving position today may have significant influence in the future,” he warned.
Another junior, Australia’s Strategic Energy Resources, was blunt about graphite’s market opportunities. “I don’t think that that the graphite industry has done anything to promote itself,” managing director Mark Muzzin told delegates.
“We could be a graphite refractory supplier but to do that won’t be a very sexy market,” he added.
