Unlike its battery metals peers, graphite has been a little late to start riding the coat tails of the so-called electric vehicle revolution.
Only about 12 of the 40-plus graphite stocks listed on the ASX have gained ground in the past year (see below). >> Scroll down for a list of ASX stocks with graphite exposure, courtesy of leading ASX data provider MakCorp
But that looks like it could be about to change.
Market forecaster Roskill says graphite demand is about to experience “rapid growth and price escalation”, which is good news for emerging graphite producers.
Rapid growth in demand for graphite in lithium-ion batteries is predicted to underpin graphite demand growth of 5 to 7 per cent annually between 2017 and 2027.
Lithium-ion batteries use about 40 times more graphite – used in the anode – than lithium.
Roskill says that by 2027, graphite use in batteries could be five to 10 times higher than the current level, depending on the uptake of lithium-ion batteries in electric vehicles and other applications.
Demand for graphite is primarily driven by the steel market, but the ever increasing growth in the lithium-ion battery industry is driving demand for both natural flake graphite and synthetic graphite.
After a prolonged period of slowing growth, steel demand is also heading north again.
Graphite is also witnessing rising demand from the building materials market because of its ability to act as a fire retardant.
On top of that graphite has been declared a “critical metal” by the US and the European Union. Latecomer
Niv Dagan, executive director at Peak Asset Management, says there is a large misconception among the finance community, that graphite is in over-supply and prices will not pick-up in the near-term.
“In essence, graphite has been one of the last minerals to respond to the ‘commodity super cycle’ driven by the electrical car revolution,” he told *.
“There is still plenty of production in China, which accounts for 75 per cent of the world’s graphite production. But it’s that very monopoly that has governments and investors looking for quality non-Chinese graphite supply.”
At the moment graphite consumption amounts to about 1.1 million tonnes each year and has a market value of roughly $1.1 billion, while the synthetic market is valued at around $13 billion annually.
“In size terms, that’s much smaller than zinc or nickel or aluminium,” Mr Dagan said.
“And in dollar terms, the annual market for cobalt at $3.5 billion is three times larger than for natural graphite.” Here’s a list of ASX stocks with graphite exposure, courtesy of leading ASX data provider MakCorp:
ASX code
Company
One-year price change
Price Jul 9 (intraday)
Market Cap
ASX code
1
Company
2
One-year price change
3
Price Jul 9 (intraday)
4
Market Cap
5
ADN
ANDROMEDA METALS
40%
0.007
6.3M
6
ADV
ARDIDEN
-19%
0.013
21.8M
7
ARM
AURORA MINERALS
-33%
0.031
3.6M
8
ASN
ANSON RESOURCES
724%
0.14
45.8M
9
AXE
ARCHER EXPLOR
100%
0.1
18.8M
10
BAT
BATTERY MINERALS
-48%
0.032
35.6M
11
BEM
BLACKEARTH MINERALS * (listed Jan 2018)
-50%
0.1
5.5M
12
BKT
BLACK ROCK
-29%
0.04
18.2M
13
BSM
BASS METALS
200%
0.03
73.7M
14
BUX
BUXTON RESOURCES
-39%
0.155
17.2M
15
CAZ
CAZALY RESOURCES
12%
0.046
10.4M
16
CDT
CASTLE MINERALS
0%
0.015
3.3M
17
CGM
COUGAR METALS
-44%
0.005
3.7M
18
CGN
CRATER GOLD
-33%
0.018
5.0M
19
CRL
COMET RESOURCES
-2%
0.049
9.8M
20
FGR
FIRST GRAPHENE
153%
0.185
70.7M
21
GBE
GLOBE METALS
0%
0.015
7.0M
22
GPX
GRAPHEX MINING
-8%
0.22
17.0M
23
HMX
HAMMER METALS
-26%
0.028
7.5M
24
HXG
HEXAGON RES
105%
0.195
58.4M
25
IDA
INDIANA RES
-12%
0.064
5.5M
26
IEC
INTRA ENERGY
-17%
0.01
2.7M
27
KNL
KIBARAN RES
-3%
0.145
40.0M
28
LGR
LANKA GRAPHITE
-67%
0.025
2.7M
29
LIT
LITHIUM AUS
-31%
0.103
42.0M
30
LML
LINCOLN MINERALS
-38%
0.023
13.2M
31
MCT
METALICITY
-47%
0.021
11.6M
32
MLM
METALLICA
-35%
0.036
12.6M
33
MLS
METALS AUS
25%
0.005
10.5M
34
MNS
MAGNIS RESOURCES
-23%
0.37
212.0M
35
MUS
MUSTANG RESOURCE
-58%
0.019
16.3M
36
OAR
OAKDALE RES
-19%
0.021
1.4M
37
PSM
PENINSULA MINES
-59%
0.009
6.4M
38
RNU
RENASCOR RES
-4%
0.022
21.1M
39
SRK
STRIKE RESOURCES
29%
0.053
7.7M
40
SVM
SOVEREIGN METALS
-14%
0.09
24.9M
41
SYA
SAYONA MINING
136%
0.033
56.9M
42
SYR
SYRAH RESOURCES
-11%
2.95
853.6M
43
THX
THUNDELARRA
-49%
0.019
12.7M
44
TLG
TALGA RESOURCES
0%
0.625
138.0M
45
TON
TRITON MINERALS
27%
0.062
51.7M
46
VRC
VOLT RESOURCES
-25%
0.021
27.7M
47
WKT
WALKABOUT RES
173%
0.15
40.3M
The price of large flake graphite – which attracts a premium over small and medium flake graphite – has tumbled from the peak of around $US2800 a tonne it was fetching in 2012.
It hit a low of $US750 per tonne last year. However, the tide has turned and the price is on its way back up.
Canadian graphite player Northern Graphite says prices for large flake graphite climbed 30 to 40 per cent in the last six months of 2017.
“While still early, this is the first real sign that battery demand is finally doing for graphite prices what it has already done for lithium and cobalt,” the company said.
Prices for large flake graphite are now up to $US1200 per tonne, according to Northern Graphite. Africa is the place to be
Roskill says Africa has become the focus of many new graphite mine developments. Syrah Resources (ASX:SYR) began production from its Balama project in Mozambique in November last year and is currently ramping up to full capacity.
Another 1.1 million tonnes of annual capacity is being developed in Madagascar, Malawi, Mozambique, Namibia and Tanzania. Kibaran Resources (ASX:KNL) recently signed a letter of intent with GR Engineering Services for the design and construction of the processing plant for its 60,000-tonne-per-annum Epanko graphite project in Tanzania.
However, despite how advanced the company is with its project, its share price has not gained much traction. It is down 3.3 per cent over the past 12 months. Anson Resources (ASX:ASN) is leading the way with a 723.5 per cent gain – but that is likely because its flagship asset is a lithium project in Utah. The eight-bagger reached 14c yesterday.
The company’s Ajana graphite project is located in Western Australia, where exploration is continuing. Bass Metals (ASX:BSM) is also a mover and shaker with a 200 per cent jump to 3c.
The company is currently ramping up production at its Graphmada graphite mine in Madagascar to produce 6000 tonnes of premium large flake graphite each year during stage one.
Bass is planning a stage-two expansion to 20,000 tonnes per annum. Triton Minerals (ASX:TON), which last last month approved the development of its Ancuabe graphite project in the East African country of Mozambique, is up 27 per cent. Construction is expected to start later this year and graphite production is due by late 2019. Walkabout Resources (ASX:WKT), First Graphene (ASX:FGR), Sayona Mining (ASX:SYA) and Hexagon Resources (ASX:HXG) have also more than doubled their share prices in the past year.
The biggest loss goes to Lanka Graphite (ASX:LGR), which tumbled 67 per cent to 2.5c, followed by South Korea-focused Peninsula Mines (ASXSM) – down 59 per cent to 0.9c.
SM) – down 59 per cent to 0.9c.
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