"Graphite the New Black Gold & The Next Mining Boom"
Graphite is emerging in the critical metals sphere, and some junior graphite stocks are reaping the benefits (with a little help from lithium and Tesla (NASDAQ:TSLA)).
Last year, the Investing News Network (INN) chatted with Jon Hykawy of Stormcrow Capital to see what has contributed to graphite’s growing demand.
He said that, “natural graphite in a lithium-ion battery actually increases the energy density of the cell, makes the battery better,” which could be one reason why some graphite companies saw success in the last months of 2016.
"Did you know graphite is as tough as diamonds, but its unique structure makes it light, soft, and highly resistant to heat as well?"
Rabid growth investors are constantly in search of “what’s next” to catch fire; be it the “next big thing” in technology
Now we have another candidate for bringing a new mining boom – graphite.
2005 China's dwindling supply and the price of graphite has tripled since, in large part due to the demand for lithium ion batteries to power electric vehicles.
Around 2004 researchers Andre Geim and Konstantin Novoselov from the University of Manchester figured out how to create a potentially revolutionary new material from graphite. The material is graphene and it does appear to be the real deal.
What is graphene and how can it be used? The technophiles among you can dig into the structure of carbon atoms and the like, but for most of us simply knowing this material is ultra-thin, stronger than steel, and conducts electricity better than copper is enough to get the investing juices flowing.
Graphene is already the subject of global research aimed at making the material suitable for 3D Printing (Additive Manufacturing) but the potential applications go far beyond that “next big thing” technology. Researchers in Australia at Monash University along with researchers from US Rice University have developed a graphene coating for copper. Researchers at MIT (Massachusetts Institute of Technology) in the US have developed a graphene based solar panel.
However, the most exciting possibility for graphene can be seen in the US$3 billion dollar project to develop next-generation chip technology to replace silicon, sponsored by IBM. Graphene is a leading candidate. The information age was ushered in by the development of the silicon-based transistor. Think of the products today powered by silicon chips.
The other driver of graphite mining stock prices is the lithium-ion battery. The US and China both have stated goals of one million EVs (Electric Vehicles) in operation by 2015. The batteries to power the EVs need flake graphite. Industry sources claim that as little as a 5-10% increase in EV market share would double the current global flake graphite production by 2020.
There are some who scoff at the notion of mass market acceptance of EVs. Others look to the success of US based EV manufacturer Tesla Motors. Sceptical observers laughed at the company’s first entry into the market, a sport vehicle with a price tag of $109,000. Bearish investors laughed even more when the company went public in June 2010 and the stock price plunged later as the company experienced mechanical failures in its vehicles leading to fires. The problems were fixed; a luxury sedan priced at $57,000 was introduced; and the Bulls appear to be getting the last laugh. From Yahoo here is a price movement chart for Tesla since its inception on the US NASDAQ exchange.
Tesla’s next move is to create an EV for the mass market within three years, priced at around $30,000. Right now Tesla cannot manufacture enough of its vehicles to meet demand, so sceptics again question how they can possibly penetrate the broader market. The company’s response has been to begin construction of its own “gigafactory” to drive down the cost of lithium-ion batteries by 30%.
The use of lithium-ion batteries in consumer and industrial tools, cell phones, computers, digital cameras, and a host of other electronic devices is growing as well. Combine these three drivers – graphene, EV batteries, and electronic and industrial lithium ion batteries – and you have the makings of a potential “perfect storm” for investors.
