What is the price of graphite?
A recently released update to a feasibility study conducted by Focus Graphite on its Lac Knife project in Quebec provides some indication of how difficult it actually is to answer this question.
As a starting point, Lac Knife’s updated feasibility study says it used an average selling price for graphite concentrate of US$1,679 per ton of concentrate.
Well and good, but note that we are talking about concentrate here, not the pure raw material.
After that, however, the study moves on to a more detailed analysis of how this price came about.
By weight, graphite makes up more than 28 percent of an electric car battery, followed by aluminum, then just under 19 percent, and then nickel
Focus Graphite was based on the Benchmark Mineral Intelligence Flake Graphite Price Index, an independent compiler of worldwide graphite prices that takes into account variations in graphite flake size and concentrate purity.
The assumptions are based on the mesh size needed to trap a flake of graphite and range from $2,040 per ton for a +48 mesh product to $1,579 per ton for the smallest economic product.
Since the size of the flakes is variable within a given deposit, the resulting graphite price is likely to be an aggregate and that is even before the market imposes its own price pressure on supply and demand.
Larger flakes are known to be generally more desirable and have the highest price, although intriguingly not all CEOs of graphite companies agree on why this is so.
The standard version is that the conductivity of the larger flake is greater and this, in turn, is at the core of why graphite has been in the news a lot in recent years.
Graphite, it is thought, will probably play a central role in the greening of the global economy.
That’s because graphite is an important component of all next-generation batteries.
A much-cited statistic from the World Bank last year estimates that more than 50 percent of the created demand for new batteries is going or will go to graphite. Lithium, the front runner, accounts for a much more modest 4 percent.
By weight, graphite makes up more than 28 percent of an electric car’s battery, followed by aluminum at just under 19 percent, and then nickel.
It is this dynamic that underlies a statistic that is highlighted by Blencowe Resourcesa UK listed graphite company.
Demand for flake graphite, Blencowe claims, is likely to nearly triple in the coming years, from 1.5 million tons per year in 2020 to 4.3 million tons per year in 2030.
It is therefore not surprising that there is a renewed interest in graphite mining and even a recent boom in graphite in Australia.
But in mining, slow and steady usually wins the race, and it won’t be the bandwagoners who stay the course and ultimately reap the significant benefits on offer.
Rather, the ones to watch will be those with longer term game plans and with a specific expertise and knowledge of graphite such as Blencowe (current share price 4p) and Tirupati graphite (33p).
Tirupati is a pioneer in the London market, with significant and growing production from its projects in Madagascar, as well as significant value added upstream in India.
Tirupati knows not only how to mine graphite effectively and with social license, but also how to move it up the value chain and turn it into an end product.
That makes it quite unique in the graphite mining industry and as such it has the distinction of being one of the few leading graphite companies in the world.
Blencowe is another animal, single project company focused on developing the Orom-Cross graphite project in Uganda.
Uganda is not a major destination for the world’s mining industry, but Orom-Cross has high quality graphite, both in terms of quality and flake size, a pre-feasibility study demonstrating the viability of a 21-year operation and a full feasibility study in the works .
Power Metal Resources (0.93p) is different again – a multi-asset, multi-jurisdictional company with exposure to gold, nickel, lithium and a host of other commodities.
The graphite project in Canada’s Doerksen Bay was acquired in January this year and is the centerpiece of a newly established subsidiary called ION Battery Resources. ION will also own certain Power Metal lithium projects.
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