Graphite Forecast 2019: Execs Optimistic, Say Investors Must Do Research

CEOs and company executives share their thoughts on graphite market trends in 2018 and the graphite forecast for 2019.

In 2018, demand for graphite continued to grow strongly, underpinned in part by the electric vehicle (EV) boom. Graphite is an essential element in the lithium-ion batteries used to power EVs.

But what will happen to graphite next year? To find out, the Investing News Network reached out to a number of companies in the space to get their thoughts on what’s ahead for graphite in 2019.

Shaun Verner, president and CEO of Syrah Resources (ASX:SYR); Peter Wright, executive director at Bass Metals (ASX:BSM); Stephen Riddle, president and CEO of Asbury Carbons; Ugo Landry-Tolszczuk, president and COO of SRG Graphite (TSX:SRG); Blair Way, president and CEO of Leading Edge Materials (TSXV:LEM); Brent Nykoliation, senior vice president of corporate development at NextSource Materials (TSX:NEXT); and Mike Rosenstreich, managing director at Hexagon Resources (ASX:HXG), were all able to provide insight. Read on to learn their thoughts on the graphite forecast moving ahead.

Graphite trends 2018: The year in review

In 2018, SRG’s Landry-Tolszczuk expected a continued run in energy metals in terms of both pricing and equities based on strong fundamentals.

“Fundamentals remain strong, but starting in June energy metals (cobalt, nickel, graphite, lithium and to a lesser extent, copper) started falling (although prices in graphite haven’t fallen at all in 2018, they have risen) and equities took a huge hit,” he said.

Similarly, Leading Edge’s Way expected an increase in attention for battery materials — which the market saw, but Way said that the demand for products in the western world is lagging behind expectations created by the increased attention.

“This has made investors cautious, which has impacted share prices over the year,” he said.

Speaking about how the graphite market has performed this year, Syrah’s Verner said there’s been a lot of interest for his company’s product. Syrah started production at its Balama project in November 2017.

“We are getting a feel about the overall graphite market, but it is early days. [What we see] right now is a very strong interest in our product worldwide,” he said.

Verner also talked about the differentiation seen in the last couple of years between those who have a historical view of the industrial components of the market, which are primarily steel driven, and those who are very positive about demand from the battery sector.

“This year is the first year where we have seen those views integrate, and the market getting its head around what batteries could mean for supply and demand in the future,” he said, adding that Syrah’s Balama production was another major factor impacting the market in 2018.

According to NextSource’s Nykoliation, in 2018 prices were expected to move up marginally for the larger-flake material (+80/95) for refractory purposes and for -100 mesh material, which is predominately used as the precursor material for anode applications.

“Both ended up happening, which reflects that the market for refractory shows small gains every year, but more importantly that the battery market, while expected to be a high-growth market, is still a small market relative to the traditional uses,” he added.

Speaking about the most challenging aspect of the market this year, Nykoliation said graphite continues to be recognized as a critical battery material, but is consistently overshadowed by the metals used in cathodes — lithium and cobalt.

Additionally, he said the graphite end markets/industry is opaque and complex, and therefore not easily understood by investors. “The biggest challenge continues to be education and re-education of the graphite space to investors. It is very difficult for investors to understand what makes one project better than another and why,” he noted.

Bass Metals’ Wright also talked about some of the misunderstandings in the graphite sector, and what mistakes investors should try to avoid if they are looking to jump into the space.

“First of all is the difference in pricing across the different concentrates,” he said, adding that the second-most-challenging aspect of the space is financing.

SRG’s Landry-Tolszczuk said graphite equities sentiment is directly tied to other energy metals.

“Supply is tight and is expected to remain tight, especially in the larger flake, which is the reason pricing remains high. Equities are low and it is hard to finance construction projects when sentiment and equities are low,” he explained.

Leading Edge’s Way said the most challenging aspect of the market has been the disconnect between demand and supply.

“Demand for battery materials is currently very small and only in Asia,” said Way, adding that investors get excited by the hype, but do not understand the time it is taking for a market for battery materials outside of Asia to develop. “Cell manufacturers in Europe and North America are very slow to establish cell-manufacturing facilities,” he added.

Meanwhile, Hexagon’s Rosenstreich believes the most challenging aspect of the market right now is being able to market a reasonable amount of material.

“We are looking to market 50,000 tonnes of concentrate flake,” Rosenstreich explained, which Hexagon expects to convert into a dozen of different products.

Graphite outlook 2019: Better market expected

As the year comes to an end, many market watchers are wondering what’s ahead for graphite.

In 2019, NextSource’s Nykoliation predicts a better market in general.

“It is almost monthly that we are seeing the major car manufacturers updating the market on their research and development efforts and growth plans for electric vehicle models. These efforts will put continued incremental pressure on the -100 material pricing,” he said.

Additionally, there is a growing trend for manufacturers to source their graphite and value-added anode material from non-Chinese sources, as China continues to grapple with environmental issues.

“Jumbo/extra-large flake (+50/95-97 percent mesh) graphite required for expanded graphite applications (graphite foils) is an increasing market and is commanding the highest prices. Expect to see continued price strength for those applications,” Nykoliation added.

For his part, SRG’s Landry-Tolszczuk highlighted that graphite supply remains tight and prices in graphite have been trending upwards in 2018.

“[This] is expected to continue in 2019,” he said, adding that the market seems uncorrelated to fundamentals right now, so it is hard to predict what will happen to equities in 2019.

Next year, Leading Edge’s Way said the market will see accelerated growth in forecast demand for battery materials — the space will see more indicators of electrification of transportation in all regions.

“It will be good for graphite and battery materials, but it will be tough to manage expectations as the true demand will lag the forecasts and it will be a few more years before we see true battery material demand,” he added.

Speaking about the short-term graphite market, Asbury Carbons’ Riddle said he expects growth in the market, although for prices he expects natural flake graphite will be lower or remain flat next year.

For investors interested in the graphite space, Riddle gave his best suggestion for the new year.

“[As an investor] in the natural flake graphite market, it’s about finding the right junior miner that fits the criteria of being low cost, that has a good business plan and that is realistic in the market,” he said.

Similarly, NextSource’s Nykoliation said investors should do their homework.

“Focus on companies that have technical/feasibility studies completed on their projects that show project economics,” he added.

SRG’s Landry-Tolszczuk suggested investors should pick projects that have a competitive advantage and have a path to production.

“Unlike other resource plays, graphite resources don’t get bought out by majors, they have to go to production. If CAPEX is too large or regulatory processes are too long, projects won’t get done and no value will be driven. Pick projects/management teams which you believe will get built in the next few years with a plan to get there,” he added.

For Way, right now there are some buying opportunities. “Share prices are way down and the fundamentals of these strong battery material companies remain unchanged. It is a good time to average down if you are a believer in the update of electrification of transport,” he added.

For Hexagon’s Rosenstreich, those new to the sector should remember that the graphite market is not a mining play — it is not about mining metrics or resources or even grades, but marketing.

“The resources are relevant, but the biggest valuation driver is the company’s ability to penetrate specific markets and have a sound marketing strategy,” he added.

Graphite outlook 2019: What’s ahead for companies

Looking ahead, Verner shared his thoughts on Syrah, which is developing the world’s largest natural graphite project, and what’s next in terms of supply — something market watchers are eyeing.

The CEO stressed that production at the Balama project in Mozambique will be driven by market demand going forward.

“Next year we expect to produce between 250,000 and 300,000 tonnes and we will move to full capacity depending on demand,” he added.

In August 2018, Bass Metals’ flagship project, the Graphmada large-flake graphite mine, achieved nameplate production, just a couple of months after the mine was commissioned — one of the most important pieces of news for the company this year, Wright said.

Bass Metals’ major corporate objective over the next 12 months is the delivery of a stage 2 upgrade and expansion at its Graphmada large-flake graphite mine by early 2020, which will increase production volumes to 20,000 tonnes per year.

Meanwhile, 2019 is also set to be a busy year for NextSource, which is developing its 100-percent-owned Molo graphite project in Southern Madagascar.

“We are a very advanced project and are just waiting for the mining permit, which we expect by March. Once we have those, we will have immediate news flow regarding mine funding and additional offtake agreements,” Nykoliation said.

Similarly, SRG Graphite, which is focused on developing the Lola graphite deposit in the Republic of Guinea, West Africa, will have plenty of news flow in 2019.

“[We have a] feasibility study coming out in Q2 2019. A lab was built on site and we have employees making graphite from our site as we speak. [There will be] offtake agreements to follow early in the new year,” Landry-Tolszczuk added.

Leading Edge Materials will continue to focus on its flagship asset, the Woxna graphite production facility located in Central Sweden.

“We are growing our portfolio of battery materials in Europe as well as advancing our graphite mine by adding equipment to enable production of battery anode materials,” Way said.

Meanwhile, Hexagon Resources, which is looking to become a vertically integrated graphite business, is focused on developing its McIntosh project in Western Australia to supply high-specification graphite materials to both traditional and emerging markets.

Speaking about what’s ahead for his company, Rosenstreich talked about its joint venture with Mineral Resources (ASX:MIN), the company’s technical test work and how Hexagon will continue to focus on its downstream business.

Don’t forget to follow us @INN_Resource for real-time news updates!

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

Editorial Disclosure: Leading Edge Materials, NextSource Materials and SRG Graphite are clients of the Investing News Network. This article is not paid-for content.

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 and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Last week’s top-gaining stocks on the TSX were NextSource Materials, Gear Energy, Entree Resources, Pipestone Energy and Crew Energy. 

The S&P/TSX Composite Index (INDEXTSI:OSPTX) opened lower last Friday (September 24), trading at 20,401.85 by midday. It closed the period at 20,400.44.

The index avoided a weekly loss, although healthcare and technology stocks were trending lower.

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city harbour with boats

Australia isn't a producer of graphite (yet), but three states in the country are home to millions of tonnes of reserves and resources.

Graphite has been growing in popularity in recent years as its applications as a battery mineral are realised, and as the popularity of electric vehicles grows around the world.

A form of carbon, graphite is a good conductor and is invaluable in electronics. It comes in three different forms, each with their own valuable applications in modern technology, making it a sought-after commodity without which supply lines for many industries around the world would grind to a halt.

Graphite isn't produced in Australia (yet), but the country sits on 1.05 million tonnes of ore reserves, and 7.14 million tonnes of economic demonstrated resources (EDR), as per 2017 government data — and those numbers are way up from the previously disclosed data from Canberra in 2013.

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text saying "top stories this week"

Catch up and get informed with this week's content highlights from Charlotte McLeod, our editorial director.

Top Stories This Week: Powell Gets Fed Nomination, Using Gold in a Market Correction youtu.be

We're back after a break last week with quite a bit to cover in the gold space.

After running up past the US$1,860 per ounce mark midway through November, the yellow metal has taken a tumble. At the time of this writing on Friday (November 26) afternoon, it was sitting just under US$1,790.

Gold's losses this week have been attributed to elements like a stronger US dollar and better Treasury yields, although Jerome Powell's US Federal Reserve chair renomination has pulled other factors into play — some market watchers believe he may move to taper and raise interest rates faster than anticipated.


If the Fed follows its previously laid out timeline for tapering, it will wrap up in mid-2022; the central bank has said it won't raise rates until after that. It has also emphasized that its roadmap may change if necessary.

Looking at the larger picture for gold, I heard recently from Nick Barisheff of BMG Group, who believes the stock market is due for a major correction.

"The market is due for a major correction. What will cause it and when it will happen is anybody's guess — it could be tomorrow, it could be six months from now" — Nick Barisheff, BMG Group

It's impossible to know when this correction will happen, but Nick emphasized the importance of acting before it's too late. He pointed out that investors are typically slow to get out of the market once a crash actually begins — they wait for a turnaround, and by the time it's clear there won't be one, they've experienced big losses.

In his opinion, the solution is to get out of the stock market early and transfer money into gold.

Here's how Nick explained it:

"Instead of taking your money off the table and going into cash … you go to gold (because cash is devaluing daily). Gold will at least hold its own and probably appreciate … so by sitting it out in gold you can wait until the market finishes correcting and then buy back in" — Nick Barisheff, BMG Group

With gold's future in mind, we asked our Twitter followers this week what price they think the metal will be at the end of 2021. By the time the poll closed, most respondents had voted for the US$1,800 to US$1,900 range.

We'll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

Finally, in the cannabis space, INN's Bryan Mc Govern spoke with Dan Ahrens of AdvisorShares to get his thoughts on 2021 trends and what's ahead in 2022.

Dan was candid, and said if he had to choose one word to describe the cannabis market in 2021, it would be "painful." Like many others, he's been disappointed in the industry's performance — while positivity initially ran high due to excitement about potential federal changes in the US, ultimately progress has been slow.

"Cannabis started with a big run-up in January and February ... and things dragged from there" — Dan Ahrens, AdvisorShares

Still, Dan has hope for 2022 and said it will be a "huge year" for cannabis. He believes US reforms will come sooner rather than later, and in his opinion those widely anticipated changes will bring a wave of M&A activity.

Specifically, he expects to see alcohol, tobacco and other consumer packaged goods companies making deals with cannabis players, not just cannabis entities doing transactions with each other.

"Those big alcohol companies, tobacco companies, other consumer packaged goods product companies — they're waiting. They're waiting on the US" — Dan Ahrens, AdvisorShares

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there's someone you'd like to see us interview, please send an email to cmcleod@investingnews.com.

And don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, 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 and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

cannabis plant layered with German flag graphic
Dmytro Tyshchenko / Shutterstock

Catch up on some of the biggest news of the week for the cannabis investment world.

Three political parties have formed a coalition in Germany, leading to a new government, and it has promised cannabis reform in the European nation.

Meanwhile, a popular cannabis retailer confirmed consumers will now find its products available for delivery on the Uber Eats mobile application in Ontario.

Keep reading to find out more cannabis highlights from the past five days.


Coalition of parties promises forward-looking cannabis policy

Germany, a country with comprehensive and elaborate medicinal rules for cannabis, is in a time of transition as a new government is set to begin to take over after 16 years of Angela Merkel.

Olaf Scholz, the proposed next chancellor of Germany, leads a three party coalition that will become the country's governing body. As part of its promises, talk of adult-use cannabis regulation has now gained even more momentum. A report from MJBizDaily quotes a German policy document that shows the coalition's stance:

"We are introducing the controlled distribution of cannabis to adults for consumption purposes in licensed shops. This controls the quality, prevents the transfer of contaminated substances and guarantees the protection of minors."

However, despite the promise and excitement, it remains to be seen how these ideas will be applied since no formal regulations have been drafted or approved yet.

Canadian cannabis retailer partners with popular delivery app

Tokyo Smoke, a cannabis retail operator in Canada owned by Canopy Growth (NASDAQ:CGC,TSX:WEED), announced a collaboration agreement with Uber Canada (NYSE:UBER) whereby cannabis consumers will be able to use the Uber Eats app to order products before they visit stores.

While the app won't let consumers get cannabis delivered to them, this new method opens the doors to more dynamic ways of buying cannabis.

"As a market leader in innovation and a platform used by so many Canadians, we believe this is the ideal next offering that can be done safely and conveniently on the Uber Eats app," Mark Hillard, vice president of operations with Tokyo Smoke, said in a press release.

A report from the Canadian Press indicates Ontario is considering allowing dispensaries to have delivery and pickup options made available to consumers permanently. The province allowed some of these purchasing options at the outset of the COVID-19 pandemic, but then removed them.

Lola Kassim, general manager of Uber Eats Canada, said this new end-to-end experience will provide consumers with responsible access to legal cannabis products.

Cannabis company news

  • Organigram Holdings (NASDAQ:OGI,TSX:OGI) issued financial results for its Q4 2021 period. In its report, the company notes a net loss of C$26 million despite a 22 percent uptick in net revenue to C$24.9 million. Beena Goldenberg, the newly appointed CEO of the firm, is encouraged by the market share position earned by the company, which said it became the fourth biggest producer in Canada during the reporting period.
  • Halo Collective (NEO:HALO,OTCQB:HCANF) confirmed the decision for Akanda, its spinoff company focused on international cannabis opportunities, to begin trading on a US exchange. "The number of shares to be offered and the price range for the proposed offering have not yet been determined," the company told investors in a press release.
  • High Tide (NASDAQ:HITI,TSXV:HITI) announced the acquisition of 80 percent of NuLeaf Naturals, a CBD product wellness developer, for an estimated US$31.24 million. The deal includes a three year option clause for High Tide to complete a total acquisition. "As international markets open up and as export regulations evolve, NuLeaf's cGMP-certified facility positions us to take advantage of the global CBD business opportunity," Raj Grover, president and CEO of High Tide, said.
  • Humble & Fume (CSE:HMBL,OTC Pink:HUMBF) released the financial report for its first 2022 fiscal quarter to shareholders and the market. "As the legal cannabis market in North America continues to mature, Humble remains agile and focused on providing a leading solution for brands to scale quickly and retailers to focus on their customers," Joel Toguri, CEO of Humble, said.

Don't forget to follow us @INN_Cannabis for real-time updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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