Mining News

A brief guide to Graphite

Posted by Cheryl Rutledge on 8/12/2014 11:59:41 AM

by Joshua Allsop and Kenneth P. Green

After decades of near-dormancy in the graphite industry, an increasing number of companies are racing to produce flake graphite, the purest natural form of the mineral touted for its lightness, extreme resistance to heat and high conductivity.

Graphite’s highest-volume use is in the steel industry, where graphite electrodes are critical for furnaces, and increasing steel production as China has built skyscrapers and railways means pricing increases.  However, recently this substance is experiencing a commodity boom as the key ingredient in the solar panels, and batteries.

The use of graphite in batteries has been increasing in the last 30 years. Natural and synthetic graphite are used to construct the anode of all major battery technologies. The lithium-ion battery utilizes roughly twice the amount of graphite than lithium carbonate.

The mineral is a major component of lithium batteries – lighter and more powerful than traditional batteries – that are finding their way into ever broader markets, from laptops and cordless power tools to hybrid electric vehicles.

Tesla Motors Inc (NASDAQ:TSLA) makes the most sought-after electric cars in the world. The cars run on advanced electric batteries and Tesla CEO Elon Musk wants to build those batteries in America. Tesla has dubbed its $5-billion pet project the "Gigafactory," and it could be up and running by 2017, prompting the need for battery-grade materials like graphite, lithium and cobalt.

The largest issue with graphite to be used in batteries is the ease with which it can be refined to suit batteries. The way in which the other compounds and minerals are mixed in with the graphite will determine this. This is a question of metallurgy. At prices today the large flakes of graphite sell for around $1,600 /tonne, while the amorphous graphite spot price is around $500/tonne.

Shifting graphite demand trends are driving prices for the flake variety to all-time highs, a fact not lost on investors or the companies trying to produce it. Market capitalizations are reaching new heights for mining companies across the board, from early stage explorers to others closer to actual production.

It is estimated that the world reserves of graphite exceed 800 million tonnes. China is the most significant graphite-producing nation, providing more than 70 per cent of world production, and nearly one-half of the United States’ annual graphite demand (the U.S. produces no graphite). Flake graphite has also traditionally been imported to the U.S. from Brazil, Canada and Madagascar. Lump graphite is imported from Sri Lanka.

The rapidly expanding list of junior mining companies conducting exploration for graphite projects will produce only a few successes but it is forecast that the demand will continue to grow causing a more long term boom.

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