On June 14, Zimtu Capital hosted the first ever Vancouver Commodities Forum at the Hyatt Regency Hotel.
Chris Berry of House Mountain Partners and the Disruptive Discoveries Journal joined the Investing News Network (INN) to discuss graphite. Specifically, he spoke about how much of it is actually used in batteries, whether graphite supply will be able to keep up with demand and which graphite stocks he’s keeping an eye on.
In the video, Berry talks about both synthetic and natural graphite, but points out there isn’t as much natural graphite in batteries as one may think.
“Purity is of utmost importance and that’s why many of the battery manufacturers, the anode producers in particular, are more focused on synthetic supply,” he said.
Watch the full interview to see what he had to say:
INN: Graphite has been popular among investors in recent years due to rising demand in lithium-ion batteries. What are your thoughts on that?
CB: Well, I think, you know, you’re absolutely right. This story speaks for itself. Graphite actually is really more of a steel story, at this point in time, and I think that’s why the pricing has been under pressure of late. But I think, you know, a focus on not just graphite itself, in terms of the flake size but also what the companies intend to do in terms of spherical graphite is a much more interesting story going forward.
CB: Well, I actually don’t think that Tesla will be able to source their lithium, cobalt or graphite from companies in North America, so that’s probably a separate issue right there. But obviously, when you think about Tesla and the potential demand from the gigafactory we should also think about the 11 other battery factories that are in various stages of production right now. It bodes very well for lithium, cobalt and graphite and that’s why you’ve seen so much investor interest of late.
INN: Some investors are still confused by synthetic and natural graphite, how much natural graphite is used in batteries?
CB: Not quite as much as you would think. At this point in time, right now, batteries predominantly use synthetic graphite and that’s because, again, when we start talking about these chemical reactions, if you will, what’s inside the batteries purity is of utmost importance. That’s why many of the battery manufacturers, the anode producers in particular, are more focused on the synthetic supply as opposed to the natural supply right now.
INN: Will the graphite supply be able to keep up with growing demand? Why or why not?
CB: I think it will for the next little while and it’s because graphite is really a steel story. I think 70 percent of graphite demand comes from the steel business, which is suffering from over capacity right now due to what’s happening in China. So once that levels itself out I do see higher graphite demand in the future. I think, again, a bigger issue is to focus on spherical graphite which is what’s used in the battery business.
INN: Which graphite stocks are you watching right now?
CB: Well, there’s one in particular, it’s Alabama Graphite (TSXV:ALP). You know, you talked earlier about a domestic source of graphite, domestic being US based. And also I think, you know, they’re not just aiming to be a graphite producer but what they’re really looking at doing is going further up that supply chain and producing spherical graphite for specific customers. So it’s an interesting business model.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network.
Alabama Graphite is a client of the Investing News Network. This article is not paid for content.