Will graphite explorers benefit from the renewable energy transition?
- By: John P Sykes
Posted in: Blog, Commodities, Conferences, Exploration, Future, Mineral Economics, Mining, PhD, Publications, Research, Strategy
The final presentation I made in 2017 was at Mines and Money in London, and the first on behalf of Richard Schodde and MinEx Consulting.
Many of the companies and analysts at the conference were focused on the battery metals industry. In line with this, I was invited to give an overview of the graphite industry, its role in the battery market and the energy transition, and the prospects, in general, for graphite mining and exploration companies.
The key points I made in the presentation were that the energy transition will likely have a substantial impact on some currently minor metal markets, including graphite. However, the multitude of renewable energy, electric vehicle, and battery technologies means it is not clear which technologies (and thus minerals) will be required in the future and in what quantities. Nonetheless, graphite is broadly exposed to the lithium-ion (and some other) battery markets, so is a relatively robust bet.
Looking more broadly at battery and renewable energy raw materials, unfortunately we see that many of these are minor minerals markets, with many of them classified as ‘critical’, including graphite. These minerals are supply-constrained by non-geological and non-technical issues – specifically sustainability and geo-political (‘strategic’) constraints. The mining industry therefore, in resolving these constraints, or not, will have a major impact on which minor metals will become available for mass consumption as energy metals by renewables and battery companies.
So far, the graphite (and wider energy transition) opportunity has not been fully realised by the mining sector. Nonetheless, graphite (and some other minor metals markets) have the latent potential to become major industrial mineral markets. To unlock this opportunity, miners and explorers need to think carefully about their strategy, ensuring supply capabilities are aligned with appropriate market entry and demand scenarios.
In the end, however, the socio-political context of the energy transition will determine into which sort of future we progress and how graphite is used. The socio-political context in the future could be more globalisation, or more localisation, sustainability focused, or geopolitically focused, and with a voluntary or forced energy transition. Two scenarios were described in the presentation to help envision these differing socio-political contexts and their impact of the minerals industry. Ultimately, however, when considering this uncertainty, a ‘hedging’ type strategy is most appropriate for miners and explorers, with the best hedge for graphite being a focus on existing graphite consumer product markets.
The presentation is available below, or on the MinEx Consulting website, where there are several other freely available and excellent presentations on minerals exploration by Richard Schodde.