Resumen de Talk From The Top: Northern Graphite
The graphite industry is dependent on seasonal, inefficient Chinese mines with poor labour and environmental practices and an increasing level of government intervention. Northern Graphite sees this as an opportunity to build a modern, environmentally responsible mine in the western world that will produce almost entirely large and extra large flake, 94-98%C graphite with very competitive operating costs. Our goal is ultimately to expand the mine to in excess of 50,000 tpa and be the dominant producer.
No new graphite mines were built during the last economic cycle and at times, supply was tight. Also, the government in China continues to place new restrictions on the graphite industry which will negatively affect their capacity in the future, so we believe the situation will become even more acute when economies in Europe and the US turn around and China starts to grow at a higher rate again. When this will happen is anyone's guess but we see much stronger prices in the future and this scenario is just based on traditional markets. It really does not take the EV/HEV market into account. Obviously their growth has been much slower than expected but they will achieve some degree of market penetration and it won't take much to have a big effect on graphite prices.
Our biggest challenge is raising $100m to build a mine at a time when economies are weak and graphite prices have softened. It would be helpful if financial markets were provided with a sign that the industry supports a project, any project, but so far there have been no meaningful offtake agreements/strategic partnerships in the graphite industry. Doing nothing is a strategy, as long as it is a conscious decision which I guess would be based on the expectation that long term graphite supply is not an issue. Northern Graphite is betting the opposite. History will determine who is correct.
