The demand in the lithium-ion batteries (LiBs) used to power electric cars is growing more than ever, and because of this, lithium, cobalt and graphite have been at the top of mind for automakers.
Not only are consumer electronic companies competing for the same resources, but massive automakers around the globe are all racing to claim their stake in the world of electric vehicles.
The anode in lithium-ion batteries is made out of pure graphite and the market for LiBs is only growing faster each year.
When compared to traditional batteries, LiBs are lighter, more compact, and hold more power. Their flat voltage power allows them to provide nearly 100% of their power capacity until discharged.
Although EVs are easily the fastest growing application for LiBs, they are not the only things that use LiBs. Consumer electronic devices such as laptops, cell phones, and cameras use them. This creates more demand pull for LiBs and subsequently graphite.
Consumer electronic companies are ready to deploy as much pressure as they can on the limited supply of LiBs to compete with the never-ending appetite that the world has for EVs. This creates a huge growth of value for metals such as graphite and lithium.
The reason graphite plays such a crucial role in LiBs is that by weight, it is the largest component within them. LiBs often carry 10-15 times more graphite than lithium itself. Not to mention this use of graphite per unit doubles due to losses in the manufacturing process.
At the rate LiBs are being manufactured today, flake graphite (the graphite used in LiBs) would need to double by 2025 to keep up. It takes 75,000 tonnes of natural graphite to make the batteries for 1 million EVs (which is only 1% of the new car market).
While there are 10kgs of graphite in the typical hybrid-electric vehicle (HEV), there is seven times that in an EV. So when demand for EVs surges, the extent to which it affects the small size of the graphite market is amplified.
If you’re curious as to how big of a financial commitment that automakers are putting towards electric vehicles, allow us to break it down for you.
The luxury automaker estimates that 20% of its sales will come from electric cars by 2024.
Budget towards EVs: US$240 million
Audi is looking to utilize its new “Premium Platform Electric” technology to begin production of its C-segment (sedans, family cars) and B-segment (small hatchbacks) vehicles. The automaker has already taken a bite out of Tesla’s pie with the release of its 2021 e-tron.
Budget towards EVs: US$12 billion.
BMW will have 25 new EV models by 2023. By 2030, the automaker pledges to reduce their CO2 emissions by 20%, and to electrify have of its SUV, sedan, and Mini models.
Budget towards EVs: US$130 million
With the Mustang Mach-E already on the market, Ford anticipated the launch of their second major EV with the heavily touted 2022 Ford Lightning F-150. The automaker is accepting reservations for the launch of the truck and is charging a reasonable US$65,000.
Budget towards EVs: US$27.7 billion
GM hired Will Ferrel to head a Super Bowl commercial touting their new electrification targets. Thats how serious they are about the EV initiative. Aiming to be combustion-free by 2035 and carbon-neutral by 2040, the company plans to roll out 30 EV models by 2025.
Budget towards EVs: US$34 billion.
Premium automaker Lamborghini announced a three-phase plan to electrify their supermodel lineups. Their first hybrid series is anticipated to launch in 2023, with a fully electric production model planned for the end of the decade.
Budget towards EVs: US$2.2 billion
We have identified US$79.6 billion of capital allocated towards EV incentives and we haven’t even included Lincoln, Honda, Hyundai, Jaguar Land Rover, Kia, Mazda, Mercedes, Nissan, Porsche, Subaru, Toyota Lexus, and Volvo.
We knew you’d be curious, so just for your information, the allocation of capital towards EVs including the aforementioned automaker brands sits somewhere around a staggering US$328 billion.
The following three stocks are capitalizing on the proliferating graphite industry:
South Star Battery Metals
Easily one of the earliest opportunities in this booming new sector, South Star Battery Metals (ticker: $STS / $STSBF) deploys sustainability-forward initiatives and operations when it comes to their graphite assets.
Their Santa Cruz Graphite Project takes place in the state of Bahia, home to the second-largest flake graphite producing district in the world. Bahia has had over 8 decades of continuous graphite production, and is known as one of the prime battery metal jurisdictions globally.
Flirting with an ESG (environmental, social and corporate governance) approach towards harvesting one of the most in-demand battery metals, $STS sits at an under-the-radar market cap of C$29.35 million at this time of writing. The average volume traded daily is well over 500,000. This offers resource sector investors a chance to participate before the hyper-growth of graphite demand and pricing has a chance to occur.
Today’s Price: $0.295
52w High: $0.31
52w Low: $0.04
Gratomic Inc. (ticker: $GRAT / $CBULF) is an exploration and mining company that focuses on low-cost mining to produce eco-friendly, high grade vein graphite. Holding assets within Namibia, Africa, Gratomic aims to be a key player in the world of EV and energy storage.
The use of air classification helps this company achieve the highest battery metal grades possible. Gratomic plans to commission its Aukan Vein Graphite Processing Plant soon, which will allow this junior miner to move on to full operational capabilities.
This stock has received lots of market attention lately, climbing up an impressive 700% in the last 52 weeks, currently sitting at a market cap of C$203.7 million.
Today’s Price: $1.24
52w High: $1.84
52w Low: $0.14
NextSource Minerals (ticker: $NEXT) is a Canadian mine development company. Hailing out of Toronto, Ontario, $NEXT is on the late stages of developing its Molo Graphite Project in Southern Madagascar.
One of the largest owned deposits in the world, Molo is a fully-permitted graphite project. Located 160km south-east of Toliara, Madagascar’s administrative capital and port city, The Molo Project’s grant of permits showcases their ability to meet all environmental and social responsibility as per the Equator Principles.
The Molo Mine, which has been designed to meet all of the international best practices, is set to begin Phase 1 production once funding has been secured.
$NEXT is up 438% in the last 52 weeks. At a market cap of $316.8 million, the stock has seen significant growth since its inception.
Today’s Price: $3.21
52w High: $5.30
52w Low: $0.50