Editorial Focus: Graphite and Graphene

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Published: Monday, 28 January 2013

Pursuing a technology agenda means sustainable, long-term profitability argues Gary Economo, president and CEO of Focus Graphite Inc*

By Gary Economo, CEO, Focus Graphite Inc.

Domestic demand is expected to push China’s production of crystalline flake graphite to just under one million tonnes over the next three years.

Roughly, that’s a 40% increase from 2010 production levels of 650,000 tpa.

While those growth rates are generally in line with global market demand projections to 2015 and beyond, there is no indication yet as to what portion of China’s production growth is destined for its domestic industrial and high-value technology markets.

The United States Geological Survey (USGS) said in its 2013 flake graphite report, that some 800m tonnes of natural crystalline graphite is exploitable worldwide.

The graphite industry should learn from the lessons of history to gird itself against the risks attached to overcapacity of supply - even at times of a bullish demand market.

Looking forward, our view is that current prices for both industrial and technology grade graphite is unsustainable and that a market price correction based on end-user demand will force an industry-wide rationalisation.

Carbon components manufactured for and consumed by mass producers in the automotive, consumer electronics, aviation and clean energy sectors are now, and will continue to be vital contributors to industrialised nations’ economic recovery and growth in the short-to-medium term

2013-2014 may well become a period of consolidation bringing a new wave of mergers and acquisitions among the owners of some 80 graphite development projects worldwide.

The graphite market is changing dramatically. New applications for carbon composites are driving change on an industrial scale, from China to Germany to the US to Brazil.

This change is exemplified in the current wave of planning articulated by end-users’ in their specification requirements for future high-purity graphite concentrates.

For example, battery manufacturers’ costs in 2012 for graphite anode material was approximately $5,000/tonne.

The electric vehicle market needs one of two things to be successful:

- Either the price per tonne of anode materials needs to be pared back to the $1500/tonne range, or;

- The same anode needs to be capable of producing four times more energy capacity.

It is possible to achieve both.

Customers are demanding better prices in order to be globally competitive over the next five to 10 years.

Competitive necessity requires producers to have the in-house capability of matching customers niche, technical requirements. Purification outsourcing adds additional cost layers.

The challenge going forward today is to protect both shareholders and business operations from external risk.

Risk protection to us is based upon a four point formula:

- Know your customers’ needs. Secure them with quality product and competitive prices

- Invest, then continue to invest in the creation of new and existing cost-mitigating technologies

- Leverage the advantage of your graphite deposit by creating a cutting edge, high technology graphene business component,

- Expand your high-grade graphite assets - domestically and globally - to support your long-term, competitive market position

Pursuing a technology agenda means sustainable, long-term profitability.



A lithium-ion battery, used in electric vehicles.
This battery is used in the Nissan LEAF. The
company announced in January that it was able
to reduce the cost of its all-electric fleet.
Nissan


Graphene

Innovation means looking beyond the borders of a graphite mining property and to future markets.

The emergence of graphene - derived from crystalline flake graphite - provided an opportunity for investigation and ultimately, action.

Graphene has taken on a life of its own. Applications are being developed individually and through partnerships with some of the largest industrial institutions in the world.

There is the potential for graphene to spawn a second industrial revolution during this decade. There is also the possibility that graphene market monetisation will begin to take place within the next 12 to 24 months, driven by demand from the green energy and infrastructural sectors.

All players in the graphite sector need to up their game in the near-term by broadening their business strategies to meet the challenges of change head-on.

Cost-mitigating technologies are critical to securing market share, profitability and ultimately, increasing shareholder value.

About the Author:

*Gary Economo is president and CEO of Focus Graphite Inc., owner of the Lac Knife, Quebec high-grade graphite deposit and, president and CEO of Grafoid Inc., the graphene investment and application development company.