Graphite Demand Uptick Pushes Up Prices, 3 Related Stocks-MNS, SYR, FGR

  • Jun 17, 2019 AEST
  • Team Kalkine
Graphite Demand Uptick Pushes Up Prices, 3 Related Stocks-MNS, SYR, FGR

What is Graphite?

A hidden gem of the metal’s division, graphite is a solid type of carbon in standard circumstances. Its atoms are organized in a hexagonal form, and it is in the crystalline form of carbon. Under high temperatures and soared pressure, the mineral coverts into a diamond.

Graphite is eco-friendly and chemically inert.

What are the uses of Graphite?

Before we get to know about the uses of graphite, it is important to understand the properties that this mineral bears. Graphite is an electrical conductor and has self-lubricating and dry lubricating properties. It is highly anisotropic but has inconsistent mechanical properties (in its natural and crystalline form).

Few uses of Graphite are mentioned as follows:

  • It is used as a refractorymaterial- to hold the molten metal.
  • The synthetic and natural form of graphite is used to create electrodes in the battery technologies, lithium-ion and zinc-carbon batteries and even in electric motor brushes.

Throwing more light on the usage, according to industry experts- with the EV revolution pacing ahead, demand for lithium-ion batteries and its vital metal graphite would soar in the times to come.

  • Used in vehicles in the brake linings.
  • Used as forging die lubricant and gear lubricant to lubricate locks especially in mining machinary.
  • Used to make pencil when mixed with clay.
  • Mixed with linseed oil or waste oil to be sued in the smokebox for railroads.
  • Other industrial applications like building car body panels, fishing rods and bicycle frames.

Given the uses of Graphite, the demand is ever increasing in the market. China has the greatest command over the graphite market as it is the main supplier, with almost 70% of the global supply. However, given the environmental stress caused by the emission through graphite mills and as a move to battle pollution, its exports have been adversely affected, directly impacting the world’s supply.

Investment in the battery supply chain (Source: MNS website)

Rise in the price of Graphite:

As discussed above, even though the supply of graphite from China stiffens, the demand for the metal is ever increasing and predicted to grow. It should be noted that the US is pacing towards developing and advancing EVs, which requires a steady supply of graphite to develop batteries for completion. The US government has levied a 10% tariff on graphite being imported from China for the car manufacturers.

Geographic EV sales (Source: SYR’s report)

On the other hand, China has gotten wary of the environmental hazards and damaging practices; it is closing numerous major graphite producing mines and is deemed to be an importer of graphite itself.

Given the two cases scenario, the price of graphite is rising and has already shown an increasing trend in last year’s first two quarters. A significant note is that the market expects the demand for batteries to be much high in 2019.

How would the growing demand for graphite match the current slapdash of supply?

Laying our focus on Australia, the emerging demand has opened doors for various global and domestic projects amongst the metals and mining players of the country. In Australia, even though graphite has been a speculative investment sector, the country has great potential to command the market with its presence in the coming years.

Let us understand 3 Graphite stocks listed on ASX:

Magnis Energy Technologies Limited

Company Profile:

With the aim to become the world’s biggest lithium-ion battery cells manufacturer, Magnis Energy Technologies Limited (ASX: MNS) has the next-gen technology for both cathode and anode. MNS has announced three large scale Gigafactories- Germany / North Rhine Westfalia for 30GWh, USA / New York for 15GWh and the Australia / Townsville for 15GWh.

MNS’s Gigafactories and opportunities (Source: Company’s report)

Recent Updates:

On 15th May 2019, the company announced that Charge CCCV, its tech partner had supplied lithium-ion batteries to Maritime Tactical Systems in the BMLMP cathode composition, to be utilised in commercial marine vessels for testing and demonstration. The aim of the testing is to make the batteries compatible across various applications.

MANTAS T12 (vessel) on an ISR mission (Source: Company’s Report)

Apart from this, the company notified that of late it had been in discussion with potential strategic investors to invest in the company, considering the future of lithium-ion batteries.

The company is progressing on the funding of the New York Lithium-ion Battery Plant. The company deems the production of lithium-ion cells from New York to be of the top significance of the iM3NY consortium and its members.

The company provided its roadmap regarding the battery technology in its investor’s presentation from 6th May 2019. The below image explains it:

Battery Roadmap (Source: Company’s report)

Share Price Information:

After the close of the market on 17th June 2019, the stock was priced at A$0.185, down by 2.632% compared to its last close.

Syrah Resources Limited

Company Profile:

An Australian player from the industrial minerals and technology department, Syrah Resources Limited (ASX: SYR) is the owner of Mozambique region’s Balama Graphite Project. At present, in Louisiana, the company is developing its downstream Battery Anode Material project.

Balama Graphite Project (Source: Company’s report)

Recent Updates:

On 14th June 2019, S&P Dow Jones Indices announced the removal of SYR from the S&P/ASX 200 Index w.e.f. 24th June 2019. On the same day, the company notified that JPMorgan Chase &Co. and its affiliates had ceased to be the substantial holder of SYR, effective 11 June 2019.

The company provided its interim update on 7th June wherein, it stated that the Q219 production is expected to be range between 45kt and 50kt. The graphite recovery and product split would be 69 percent and 86 percent fines to 14 percent coarse flake, respectively. The results would pace up from June 2019.

The shipped sales volumes forecast would be ~50kt and the Weighted average price till date was $466 per tonne. At the end of Q219, the cash position was ~US$43 million.

On 3rd June 2019, SYR notified the market that Ms Sara Watts had been hired as its independent Non-Executive Director.

Share Price Information:

After the close of the market on 17th June 2019, the stock of the company was priced at A$1.005, down by 3.365% compared to its last close.

First Graphene Limited

Company Profile:

A lead supplier of graphene products, First Graphene Ltd (ASX: FGR) has its main manufacturing base in Henderson, WA. The company has created an environment-friendly method to convert the supply of graphite to low cost and high-quality graphene in vast quantities. Recently, it was incorporated in the UK as First Graphene Ltd.

Recent Updates:

On 17th June 2019, the company provided an update regarding the bulk sample test work on the performance of the PureGRAPH® range of graphene products. First Graphene has been conducting these tests with aid of the University of Adelaide, and initial results have been positive.

As per the report, polyurethane elastomer was burnt with an LOI value of 22.85%. On adding 1% PureGRAPH®, the LOI rose to 31.6%, depicting that under regular atmospheric conditions, it would not support flame and burn only at extreme oxygen levels.

On 30th May 2019, the company announced that it had received Correspondence from Department of Health, NICNAS for the PureGRAPH™ graphene products. Post this, First Graphite became the exclusive company worldwide, securing the nod to sell up to ten tonnes of graphene powders per year to the UK and Europe along with selling off the company’s bulk of graphene powders in Australian region.

Share Price Information:

After the close of the market on 17th June 2019, the stock of the company was priced at A$0.305, down by 1.613% compared to its last close.


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