EV uncertainty dominates discussion at Graphite Conference

By Simon Moores
Published: Wednesday, 12 December 2012

Market expected to rebound in 2013 after poor twelve months

By Simon Moores and Andy Miller, Industrial Minerals Data

 

The future for electric vehicle (EV) batteries led discussion at Industrial Minerals’ 2nd Graphite Conference in London last week, despite being only the fourth largest market for the industry.

 

 Natural graphite end-markets in 2012 (Source: IM Data)
Graphite’s use as the anode material of choice in lithium-ion batteries has gained it critical mineral status which has buoyed the sector over the last 18 months.

 

By volume graphite is the largest raw material used in lithium-ion batteries – a single EV contains between 28kg and 38kg of graphite.

 

The question still remains how much graphite will be needed if EVs take off. The battery sector serving EV manufacturers has the potential to grow at 20% a year, but by volume is still far off the leading consuming market – refractories.

 

Refractories – high temperature linings and bricks consumed primarily in steel manufacturing – consumed 39% of natural graphite production in 2012 with batteries accounting for just 9%.

 

Despite this, discussions centred on EV battery potential and the technology to process the raw material into a product suitable for the sector, namely spherical graphite.

 

China holds the bulk of spherical graphite processing technology at present, something which is of concern to western manufacturers. China also produced 79% of natural graphite output in 2012, an even more immediate concern to the industry eager to avoid a rare earths-style dependency.  

 

These are some of the factors that have sparked into exploration activity over the last 18 months, especially in Canada, which has been the epicentre of the world’s search for new graphite projects.

 

These newer entrants were understandably more bullish on future demand than existing producers at the conference.

 

Graphite has recently gone through the process lithium and rare earths experienced a few years ago: a boom in prices and exploration, followed by a market slowdown leaving juniors finding it increasingly difficult to justify their projects.

 

The furore which engulfed the industry in 2011 has calmed significantly in 2012 as access to investment became a challenge for many publicly traded junior companies in North America.

 

But according to some market observers, 2013 is expected to see an upturn.

 

2013 rebound after poor year

 

2012 has been a poor year for graphite demand. Trading activity has drained out of the industry since September with little sign of return until the New Year.

 

The conference heard that Chinese production is predicted to have fallen by around 4% in 2012, primarily due to slowing construction markets around the world and a reduction in the need for steel and refractories.

 

China is also pushing to regulate its dated and fragmented graphite industry with a blanket ban on new graphite processing plants in Shandong, a major producing province.

 

The Chinese government is eager to limit lower value exports in favour of higher value products. At present it ships raw material to Japan or South Korea to be made into battery anodes and batteries which it buys back and a premium rate.

 

This situation strengthens the argument for new mines outside of China and supply diversity is high on the agenda for the graphite industry.

 

These factors, alongside an anticipated rise in demand, have encouraged market entry. However, Stephen Riddle, CEO of Asbury Carbons, has urged the industry to learn from the mistakes of the past and avoid flooding the market with supply.

 

This was seen in the early 1990s, when a string of new graphite mines went into production before promptly going out of business owing to the emergence of low cost Chinese production and shortfalls in anticipated demand.

 

This caused production to nearly halve between 1990 and 1995, and by the early 2000s all but one of five new mines went bankrupt.

Source: The Natural Graphite Report 2012, Industrial Minerals Research

 

Industrial Minerals Data ( www.indmin.com/IMData)

 

Industrial Minerals Data is a new service providing detailed prices and analysis the graphite and fluorspar industries launching January 2012.

 

Simon Moores, Manager, Industrial Minerals Data – smoores@indmin.com

Andy Miller, Junior Analyst, Industrial Minerals Data – amiller@indmin.com

 

The Natural Graphite Report 2012

 

Launched in October 2012, The Natural Graphite Report is an extensive market study focusing solely on natural flake, vein and amorphous graphite supply, demand and pricing.

 

Data, analysis and forecast for the next five years

·         New, original data from Industrial Minerals

·         Unique country supply reviews including: China, Brazil, India, North Korea, and Canada

·         Major demand drivers – Li-ion batteries, refractories, & emerging markets

·         How will prices react? Historical analysis and forecast

·         Demand destruction risks

·         Critique of the graphene revolution

 

For more information click here: http://www.metalbulletinstore.com/product.asp?PositionID=campaign&ProductID=16101



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