Graphite Demand Seen Surging from Fuel Cells, Nuclear Reactors, Graphene

Demand for graphite is rising and is expected to mushroom as this allotrope of carbon – most commonly known as part of lead pencils – finds new applications. Currently, three growing applications of this mineral – lithium-ion batteries and fuel cells, nuclear reactors, and the potential uses of wonder material graphene – are making the quest for graphite heat up.

Jeb Handwerger, an analyst, told Mining Weekly this month that he expects global demand for graphite to increase exponentially over the next few years from current production of about 1.1 million tons a year, more than 70 percent of which comes from China. He said demand could reach 1.6 million tons in five years, thanks to demand just from lithium-ion batteries, which use much more graphite than lithium.

Lithium-ion batteries, fuel cells

Electric vehicles, the buzzword of our times, could mean a surge in demand for high-grade flake graphite in the coming years as these green vehicles will be powered by lithium-ion batteries. While no concrete statistics are available, Brent Nykoliation, Vice President of Business Development at Energizer Resources Inc. (TSX:EGZ,OTCBB:ENZR,FWB:YE5) commented that China is reportedly preparing to stock up enough graphite to put one million electric and hybrid-electric vehicles a year on the road starting in 2015. At an average of 130 pounds of graphite needed per electric car battery, about 300,000 tons of graphite will be required.

Battery makers prefer synthetic graphite for lithium-ion batteries, according to a Reuters article published earlier this month. Further, the battery industry accounted for less than five percent of natural graphite market demand in 2011. However, that could change as synthetic graphite can cost more than $20,000 a tonne, while unprocessed flake graphite costs $1,500 to $3,000 a tonne. Add in the processing and coating and the price is $8,000 a tonne, amounting to major savings compared to synthetic graphite.

Gary Economo, President and CEO of Focus Metals Inc. (TSXV:FMC), said in an article that the reason battery manufacturers prefer synthetic graphite for lithium-ion batteriess is because they “need consistency from their suppliers. So when they say synthetic graphite is easier to control, I think they’re saying their suppliers are controlling the quality of the material from one batch to another. When you order natural graphite from a distributor, you don’t know what mine it’s coming from. There’s a variety of batches, and it’s very difficult for a battery manufacturer to maintain quality control.” Economo added that as flake-graphite manufacturers offer high-quality and pure material to battery makers, the dynamics of the industry are bound to change.

Pebble-bed nuclear reactors

Most of the world’s graphite production is amorphous graphite, which is used in the steelmaking industry. It’s flake graphite, whose price has soared from $1,000 to $3,000 a ton in the last five years, that is driving the demand for new applications.

A new generation of nuclear reactors called pebble-bed nuclear reactors use large amounts of flake graphite. These reactors get their name from the pebble-sized spheres of graphite mixed with uranium that they contain. “This structure allows pebble bed reactors to produce power more efficiently – and safely – than conventional reactors,” Alex Cowie, editor of Diggers & Drillers, wrote recently. “This technology means nuclear reactors can be smaller, and as easy to run as turning a switch.”

China started building a fourth generation 210-megawatt nuclear reactor using high-temperature, gas-cooled pebble-bed technology last year, International Business Times reported earlier this month. Each pebble-bed reactor would use about 3,000 tons of graphite, and China plans to boost its nuclear power capacity to 150 gigawatts by 2030, the article said, adding that China’s current capacity is less than 50 gigawatts.

Is graphene our future?

Graphene is derived from graphite and is seen as the wonder material of this century as it conducts electricity and is one of the strongest, yet most lightweight materials known to mankind. It is touted as having the ability to profoundly impact many industries, from electronics to aerospace to autos. However, the miracles of graphene are mostly being seen in laboratories, and the price of manufacturing it needs to come down before widespread commercial use can occur.

Nearly 200 companies, including IBM (NYSE:IBM), Intel (NASDAQ:INTC), and Samsung (LSE:BC94), are invested in graphene research, and companies and governments are pumping billions into graphene research.

“IBM has already used graphene to produce the fastest computer chip in history,” Diggers & Drillers’ Cowie said. “The US Air Force and Navy are funding research to investigate its potential. Graphene chips may displace silicon chips in computers. If this happens, then graphite demand would go through the roof.”

Cowie added, “[i]f scientists are even half-right, graphene could change the world as we know it, and the price of graphite will soar.”

 

Securities Disclosure: I, Karan Kumar, hold no direct investment interest in any company mentioned in this article.