The share price of Australian graphite developer, Evion Group (ASX: EVG), has surged by 23% after the Chinese government’s decision to reduce exports of the critical battery material last Friday.
Beijing has announced that its graphite exporters must obtain permits to ship two types of graphite, including high-purity, high-hardness, and high-intensity graphite material, and natural flake graphite as of 1 December this year, amid escalating global trade tensions between China and the West.
China is currently the world’s top graphite producer, accounting for two-thirds of global supply, according to the US Geological Survey. The country refines more than 90% of global graphite into the material that is used in electric vehicle (EV) battery anodes—the negatively charged segment of a battery.
However, China’s dominance is now facing challenges from the European Union and the US who are ramping up tariffs on Chinese EVs to secure their own domestic supply chains. Research has projected a six-fold demand growth for natural graphite by 2023, and a supply deficit emerging in 2025, according to UBS. The findings also backed the potential for a shift towards non- China graphite producers.
“A focus on supply chain security and lowering carbon emissions offers additional tailwinds and we see 50% upside to natural graphite prices.” Said analyst, Lachlan Shaw. “The case for natural graphite anodes, and thus natural graphite demand, continues to improve on the basis of the continued revival of the lithium iron phosphate battery format which, due to its lower energy density, does not have as high requirements for the anode.”
The move has been warmly welcomed by Evion Group managing director, Tom Revy, who told The West Australian, “Project financing has likely been difficult for the whole basket of graphite explorers, but this shift in fundamental market dynamics makes us more attractive on both the equity side and debt side.”
“The whole shift I think as inevitable because you can’t have one location hold such a large amount of control over such an important renewable battery commodity.”
Evion Group is a Perth based company focused on developing its flagship Maniry Graphite Project, Madagascar, which has a mineral resource estimate of 2.58Mt of contained graphite with construction planned to commence next year.
Mr. Revy further commented, “Graphite is still relatively cheap without having a material impact on the price of an electric vehicle, so I think there’s still room for the price to grow.”
“I think this shift puts graphite on a more realistic price level with other battery commodities rather than being ahead.”
