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Strong Demand For Elusive Graphite
BY SAM GREEN - 16/11/2017 | VIEW MORE ARTICLES BY TRADERS CIRCLE

An opportunity is lining up for the next technological boom, and already a shortage is forming in the boom’s key commodity.

Graphite is one of the two mineral forms of carbon, the other being diamond. It is desirable for its unique properties – which will lead to it being one of the most important materials of the digital age.

Despite the fact that graphite is relatively common on earth (the mineral being little more than an arrangement of carbon atoms), it is in short supply. The United States has historically been the biggest consumer of tech-grade graphite, and yet it does not even produce any itself.

The supply of graphite is complicated by the fact that high-tech applications of the commodity require high-quality, “large-flake” graphite, in contrast with the supply of graphite which has traditionally been lower quality supply from low-cost Chinese producers.

However, the quality concerns combined with environmental concerns has hampered Chinese supply, and led to some mine closures. As a result, there is a shortage of graphite, and it is already causing prices of the silvery-black mineral to rise.

It is anticipated that there will be a further 300 percent increase in demand for high quality graphite by the year 2025, which is unsurprising, given that a lithium-ion battery (such as those found in most electric vehicles[EV]) requires 10 to 20 times more graphite than it does lithium.

Indeed, Elon Musk (founder of EV company Tesla) himself has said that "Our (lithium-ion) cells should be called Nickel-Graphite, because primarily the cathode is nickel and the anode side is graphite with silicon oxide, [there's] a little bit of lithium in there, but it's like the salt on the salad."

Electric vehicle sales are going crazy due to changing environmental legislation and changes in consumer preferences. As a result, demand for lithium-ion batteries is expected to increase by over 200 percent in the next four years.

All of this bodes well for the world’s prospective graphite suppliers, most of whom are scrambling around the world at the moment, trying to source and secure high quality graphite supplies.

Indeed, looking further forward, you can break-down mineral graphite into individual layers of graphene, which is practically a two-dimensional material. If graphite is transforming the tech space today, graphene is poised to revolutionise it in the future.

Due to its unique properties, graphene is the backbone of nanotechnology, and potential applications are literally insane – and will change our world. I will leave that story for another time, but feel free to search about it yourself if you are ready to be awe-inspired.




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TradersCircle is one of Australia's leading stock market education firms, and runs one of the country's busiest options trading desks. Learn more at www.traderscircle.com.au.


 

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