Partnerships are secret to rapid realization of Northern Graphite plans, CEO says

Northern Graphite plans to fast-track the growth of its huge battery anode material (BAM) project in North America through partnerships and by keeping costs low, chief executive officer Hugues Jacquemin has told Fastmarkets

Northern Graphite, which is listed on the Toronto Stock Exchange, has a project to harness partnerships to develop a huge BAM project in Canada to meet growing demand for anode material for use in the lithium-ion batteries that are required to power electric vehicles (EVs).

“We have a strategy to build a 200,000 tonnes per year battery anode material facility in Quebec [in eastern Canada],” Jacquemin said in an interview on January 18.

The BAM market is often seen as a competition between natural and synthetic producers, vying to develop their proportion of the anodes.

Unusually, the company plans to expand in scale and beyond its base of natural graphite using feedstock from its graphite mines in Canada and Namibia, and also into the synthetic graphite market.

“Our project, which could cover 50 hectares, will offer synthetic and natural BAM from the same site,” Jacquemin said. “We will provide the infrastructure and drop-in the technology from our partners.”

Graphite is the principal ingredient in battery anodes and can be either natural or synthetic, and demand for such material is expected to soar.

Fastmarkets’ research has forecast that graphite demand from the battery sector will rise to 3 million tpy in 2032 from 348,000 tonnes in 2021, with growth in the EV sector being a dominant factor.

“We are intending to produce both forms of BAM on our supersite because that is what the customers want,” Jacquemin said. “We are not going to do it ourselves because we don’t have the resources. The secret to moving fast is to partner with leading companies in the space.”

First partnership between Chinese graphite producer

The company has announced a partnership with spherical graphite and anode material manufacturer Graphex, which is already producing natural and synthetic BAM in China and has a developing project in the US state of Michigan.

“The first partnership is [with] Graphex, which is important because it is already producing 10,000 tpy of BAM and is building its capacity to 40,000 tpy,” Jacquemin said. “With Graphex, we are using proven technology to make our anode material, which will offer a high level of certainty around quality and performance.”

Graphex has previously announced other partnerships, such as with South Star Battery Metals of Canada in June 2022.

The partnership with Graphex Technologies means that Northern Graphite can already supply anode material using feedstock from its Lac des Iles mine in Canada – the only graphite mine in North America that is currently operating.

“We can already ship material to process, and provide customers with it as it will meet Inflation Reduction Act requirements,” Jacquemin said.

The US Inflation Reduction Act (IRA) was designed to develop a battery production chain in North America and has been in place since August 2022. It is a tax credit system for consumers to incentivize electric vehicle producers to use battery raw materials that have been extracted and processed in the US, or in a country with which it has a free trade agreement.

Significant graphite growth plans expected

Canada has the potential to be a significant beneficiary of the IRA and is set to become the fourth-largest graphite producing country after China, Mozambique and Tanzania, according to Fastmarkets’ research.

Fastmarkets’ research forecasts that graphite production from Canadian mines will increase at a compound average growth rate of 37% between 2022 and 2032, to 350,000 tpy from 15,000 tpy.

Northern Graphite plans to develop its BAM project in the Baie-Comeau region of Quebec due to its proximity to the company’s mines in Bisset Creek, Ontario, and Lac des Iles.

Northern Graphite has partnered with regional development agency Innovation et Development Manicouagan at Baie-Comeau to acquire a site for the project.

“Baie-Comeau has a deep-water port [that will provide access to seaborne transport to and from] Rotterdam so we can bring in material from our project in Namibia, or move material via the Great Lakes to the US,” Jacquemin said.

The availability of huge amounts of hydro-electric power capacity in Baie-Comeau means that Northern Graphite will be able to cut down its carbon footprint in the energy-intensive process of producing BAM, especially synthetic material.

“The production of natural and synthetic graphite requires large amounts of milling, which requires a lot of power,” Jacquemin said. “Coating and purification of spherical graphite require a great deal of energy – and we will have clean, renewable and economical power in large quantities.”

And Northern Quebec offers other incentives in the forms of tax, credit and grants, Jacquemin said.

“[The region has] been trying to attract graphite companies. They are also very into developing the circular economy,” he said. “If we have a 65% yield on natural graphite in the production of BAM, that leaves 35% that could have another application in an aluminium or plastics facility.”

Graphite production to be scaled up in line with demand

“Attracting funding is all about providing a reasonable return on investment,” Jacquemin said. “The key is to get to scale, like the Chinese do, and then you can bring your costs into line with a reasonable return on investment.”

But he also stressed that the company would be building up its production in line with demand from the market.

“You can’t base your plans on hopes that sales prices will rise,” he said. “Instead, we are viable at current prices, and our mines in Namibia and Bissett Creek are highly economical.”

Natural graphite prices have been slow to respond to the growth in EV production.

Fastmarkets’ price assessment for graphite, spherical, 99.95% C, 15 microns, fob China, was $2,500-2,800 per tonne on January 19, down by $500-600 per tonne from $3,100-3,300 per tonne on January 20, 2022.

And the feedstock for this uncoated spherical graphite, which is the stage before graphite becomes active anode material, has only made relatively minor gains.

Fastmarkets’ price assessment for graphite, flake, 94% C, -100 mesh, fob China, was $830 per tonne on January 19, a rise of $70 per tonne from $760 per tonne in the same comparison.

The failure of graphite prices to replicate the dramatic rise seen in some other battery raw materials, such as lithium, has frustrated some investors.

But there is an expectation that demand will start to outstrip the supply of graphite.

Fastmarkets’ research has forecast natural graphite flake prices to rise significantly over the coming decade, and also expects uncoated spherical graphite prices to track natural flake prices, but also be subject to influences from other underlying factors.

“China is starting to run out of spare capacity. I expect we will see big demand in 2025-26 but the pressure will start to rise [this year],” Jacquemin said. “Although the growth won’t be exponential yet, shortages will start to develop.”

Fastmarkets does not at present assess the price of coated spherical graphite, which is the active anode material.

This market is dominated by China and Japan. While the active anode material market is developing in US and Europe, the specifications are commonly defined by consumers, rather than by producers offering established products.

“Cell makers are going to have to commoditize the anode materials to reduce costs,” Jacquemin said. “It must happen by designing-out some of the complexities of battery-making. Ultimately, the right products will be successful.”

Find out more about where the graphite market is headed

With demand for graphite expected to ramp up, find out more about our forecasts for the graphite market in 2023 and beyond. Information from Fastmarkets’ research is drawn from the Graphite Long-Term Forecast.

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