An attempt to preserve China’s position in the graphite marketplace by restricting supplies may cause a welcome increase in the share price of companies around the globe. With a market share of nearly 80% China is hoping to retain as much of its supply as possible, aiming in the long run to gain a stronger position as graphene and graphite based products become more commonplace.
The Chinese curtailment of its supply will inevitably cause smaller mining companies and suppliers to flourish in the short term. One such company Archer Exploration (ASX:AXE), an Australian mining firm, anticipate a rise in the price of the raw material.
Archer’s General Manager Gerard Anderson commented recently on the global supply situation, saying
“Several Chinese state owned enterprises have also been closed this year to preserve China’s graphite resources. It has imposed a 20% export duty plus a 17% VAT, and instituted an export licensing system to ensure supply to China’s domestic economy. As a result, graphite prices have started to rise, particularly for graphite flake styles which are now commanding between US$2,000 and US$3,000 a tonne depending on flake size.”
Similarly in Canada, home of Northern Graphite Corporation and the Bissett Creek mine, a decline in Chinese exports is thought to herald the promise of increased prices, sales and profit. And Northern Graphite is not alone in hoping to benefit: Focus Metals, Greenlight Resources, Strategic energy resources, Mega Graphite and Ontario Graphite all hope to cash in on the boom too.
As readers of this blog will be all too aware, graphite prices are expected to rise with the development of graphene technologies, making an investment in graphite the first piece in the puzzle of a graphene investment plan. With graphene identified as the miracle material of the 21st century there can be no doubt that the strategic significance of graphite supply will continue to be a global concern for many years to come.
Gary Economo, President and CEO of Focus Metals, is another figure in the graphite mining sector that certainly understands the importance of graphene for the global price of graphite.,
“You can make graphene out of any type of graphite. The trick to ‘useable’ graphene is to find a production technique that allows you to produce graphene economically and in large volumes – and that’s what we’re working on,” he said. “We have a joint venture that we own 40% of, and we have a process that is in the middle of being patented right now. The process, which has a number of patents surrounding it, allows us to go directly to graphene from the ore we have at Lac Knife – without any other processing steps.”
Focus Metals owns 100 percent of the Lac Knife deposit in Quebec, a 17 percent carbon grade medium and large flake crystalline graphite deposit. It says the Lac Knife property is unique in the world because of its cost-mitigating, high concentration of large, medium and small flake graphite destined to meet rising global demand from both industrial and high technology end users.