Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Might add 250k more to round up to 1m, have to shuffle a couple of things around
It is looking quite good, can't quite understand why the market is not all over this
Have heard that it has not been forgotten about. Whilst not aware of the content happy enough that it is in the pipe.
Trade squeeze
A tariff battle within the Biden administration has only exposed the battery industry's dependence on China for graphite. In 2018, U.S. trade officials slapped tariffs on several products associated with the EV supply chain coming from China, including artificial graphite. The Trump administration eventually allowed companies to apply for certain exclusions, but those exemption opportunities expired in 2021. In public comments, companies bemoaned the impossibility of getting graphite from anywhere but China.
"Tesla has concluded that no company in the United States is currently capable of producing artificial graphite to the required specifications and capacity needed for Tesla's production," California-based EV and battery giant Tesla Inc. said in comments filed with the Office of the U.S. Trade Representative and posted on Dec. 1, 2021. Tesla could not be reached for comment.
SK Battery America Inc., a subsidiary of South Korea battery-maker SK Innovation Co. Ltd., also supported the extension of the tariff exclusion on graphite, stating it was "unfeasible" to obtain graphite from the U.S. for use in the manufacturing associated with its $11.4 billion investment in lithium-ion factories in Kentucky and Tennessee in partnership with U.S. automaker Ford Motor Co. as well as its $2.54 billion investment to build battery plants in Georgia.
"Presently, it is not feasible for SK Battery America and BlueOvalSK to obtain graphite from other sources outside of China due to the uniqueness of the product, the incredible risk of entering the graphite industry, and the lack of suppliers that can meet our present needs," the company wrote in a comment to the U.S. Trade Representative.
The U.S. Trade Administration press office did not respond to multiple requests for comment on the status of the tariffs. Partners at law firm Arent Fox expect the government agency to announce whether the product exclusions will be reinstated in early 2022, according to a Jan. 13 report
Price and supply troubles ahead
The average value of natural flake graphite shot up 25% between May 2021 and December 2021, according to Suzanne Shaw, principal analyst and lead graphite expert at Wood Mackenzie. Benchmark Mineral Intelligence assessed the price of flake graphite at about $650 per tonne, up year over year from $540/t, according to its latest price report published Dec. 31, 2021. The price reporting agency has forecast the cost for this feedstock breaking $700/t in 2022. Meanwhile, the price for 15-micron spherical graphite was $2,800/t, decreasing slightly year over year from $2,825/t, according to the agency. Spherical graphite is battery grade and ranges in particle size from 10 microns to 25 microns.
The price rally will likely continue through early 2022 as the sheer scale of anticipated demand buoys prices. China's power rationing due to decreased coal supplies could also persist into the second quarter of 2022. The country primarily uses coal to provide energy, but it has been facing supply disruptions from an Indonesian export ban and a prolonged trade dispute with Australia.
"The graphite market is tightening, especially for grades that are suitable for use in batteries as demand rises robustly," Shaw told Market Intelligence in an email. "In the short term, there is room for Chinese producers to further increase production to meet capacity and alleviate some of the gap, but we believe that a tightening market will increase prices in the coming years and encourage several new producers to come online outside China by the middle of the decade."
China touches almost all of the world's graphite along its path to the consumer. The U.S. imported 64,396 tonnes of refined graphite between January and November in 2021, of which 73.3% came from China, according to data from Panjiva, a supply chain-focused business line of Market Intelligence. Even when graphite is mined or manufactured outside of China, such as from Mozambique, it is typically routed to China for processing and refinement. And most graphite refined in places such as Japan comes from China
Global reliance on China for graphite, a key ingredient in batteries, has emerged as a major obstacle to electric-vehicle makers' production schedules amid trade disputes and soaring demand.
U.S.-based battery and car companies have urged President Joe Biden to ease trade restrictions or risk impeding the administration's push to electrify transportation sectors, according to industry experts. Producers trying to break into the market for graphite, the largest component of lithium-ion batteries by volume, have begun building out new production facilities in the U.S. and Canada, but they are years away from production.
"The global anode supply chain is 100% reliant on China at some point within that chain," Shaun Verner, CEO and managing director of Australian graphite miner Syrah Resources Ltd., said in an interview. The company operates the Balama natural graphite mine in Mozambique and plans to build the first graphite processing facility in the U.S. "That heavy reliance on a single source ought to be quite concerning for [original equipment manufacturers]."
Graphite is an abundant mineral around the world and relatively cheap compared with other battery materials, but finding the right quality and type of graphite needed for batteries can be tricky. The global demand for EVs is expected to drive a massive increase in demand for graphite. The world could be short 80,000 tonnes of the mineral in 2022 as demand from the EV sector rapidly scales up, according to Benchmark Mineral Intelligence. Sales of passenger plug-in EVs are projected to hit 9.6 million units in 2022, according to an S&P Global Market Intelligence forecast published in December 2021
@toad you can’t ask them to do that even if you are correct, it’s akin to taking the eye out and coming back for the socket. We all will make money in this I am sure. Yes I’m in agreement with you on the valuation.
@Adw I guess it’s like going steady to build a relationship - some of the DD process etc will have significant cost in terms of time and resources
Toad, You can work out the numbers, now that you have the end of year figure to plug into your calculation. A slip of the tongue most likely on the presentation. The trading statement guidance now lays it all out clearly
This week just rubbish, market probably will lick wounds over weekend and BREs should have a better week next week.
Threat of graphite supply shortage looms over electric vehicle rollout
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/threat-of-graphite-supply-shortage-looms-over-electric-vehicle-rollout-68335809
explicitly I mean
Contractors (joint venture partners) take is 42.53% of production/revenue
§ EGPC take is 57.47% of production/revenue
§ United’s equity interest is 22% in the licence
§ United does not pay any corporation tax in UK or Egypt on its profits due to the PSC terms and double tax treaty.
Illustrated Example;
§ 10,000 bopd gross oil production for one month (300,000 bbls) would mean working interest (22%) production of 2,200 bopd (66,000 bbls) for United
§ Revenue at $70/bbl (post $2 discount to Brent) for United for this month would be 66,000*42.53%*$70/bbl of $1.96m and there is no taxation on this revenue
§ The same calculation applies to gas revenues
It is 42% it states that implicitly in the material from their presentations.
Agreed Ginger, why don’t some of the critics on here reach out to the company to get clarification. They are pretty good at calling back and answering emailed when requested. That would be better than some of the misinformation being spread
Merely giving the market opportunity to load up with cheap shares. the penny will drop
Look out for a big rotation into the sector if healthy oil prices maintain
Oil prices could hit $100 this year and rise to $105 per barrel in 2023, on the back of a “surprisingly large deficit” due to the milder and potentially briefer impact of Omicron on oil demand, Goldman Sachs said this week. Due to gas-to-oil substitution, supply disappointments, and stronger-than-expected demand in Q4 2021, OECD inventories are set to dip by the summer to their lowest levels since 2000, Goldman’s analysts note. Moreover, OPEC+ spare capacity is also set to decline to historically low levels of around 1.2 million bpd.
“At $85/bbl, the market would remain at such critical levels, insufficient buffers relative to demand and supply volatilities, through 2023,” Goldman -Sachs said in a note.
JP Morgan, for its part, expects the falling spare capacity at OPEC+ to increase the risk premium in prices, and sees oil hitting $125 a barrel this year and $150 a barrel next year
he bank now expects oil at $100 in the third and fourth quarters of this year, lifting its previous Q3 and Q4 forecasts from $90 and $87.50 a barrel, respectively.
“The key oil products markets (gasoline, jet fuel, and gasoil/diesel) all show strong crack spreads, steep backwardation, and inventories that have fallen to low levels. None of this signals weakness,” Morgan Stanley analysts wrote in the note.
The bank is the latest investment institution to predict that oil is headed to triple-digit territory as soon as this year, amid resilient demand, falling inventories, and declining spare capacity at OPEC+ as the group ramps up production.
Triple-digit oil “is in the works” for the second quarter this year, Francisco Blanch, head of global commodities at Bank of America, told Bloomberg last week. Demand is recovering meaningfully, while OPEC+ supply will start leveling off within the next two months, Blanch said, noting that it will be only Saudi Arabia and the UAE that can produce incremental barrels to add to the market
Morgan Stanley expects oil prices to hit $100 per barrel in the second half of the year, becoming the latest major Wall Street bank to expect triple-digit oil prices by the end of 2022.
The oil market is headed to a “triple deficit” of low inventories, low spare production capacity, and low investment, Morgan Stanley said in a note carried by Reuters