The subsequent commodity supercycle might begin and finish with Chinese graphite, the only most necessary battery materials proper now by way of provide and demand.
And one of many world’s prime producers is a North American firm with processing services arrange in China proper subsequent to one of many world’s largest graphite mines.
Now, it’s gearing as much as change into a really distinctive graphite bridge between China and the United States.
The timing is necessary: Battery and EV makers are actually fretting about graphite, the battery materials that makes up 30% of each battery and serves because the unfavorable finish, or the “anode”.
Without it, there could also be no lithium-ion battery, and whereas battery and EV makers have been busy making an attempt to safe offtake agreements for lithium, graphite is now anticipating a significant provide squeeze.
Some 70% of all graphite comes from China, and Graphex Group Ltd (GRFXY, 6128.HK) already seems to be one of many Top 5 producers in China of spherical graphite manufacturing and one of many prime on this planet.
Now, Graphex plans to construct a bridge again house.
Bolstered by long-term contracts with the Chinese state-owned enterprise and profitable offtake agreements with main producers alongside the battery and EV provide chain, Graphex is now planning a significant growth of manufacturing.
And it’s working to carry its processing know-how to North America, too.
A Looming Global Graphite Shortage?
With graphite comprising virtually half the supplies combine within the lithium-ion battery, the singular proven fact that 13 battery gigafactories are being deliberate for the United States alone might trigger a furor alongside the provision chain.
Tesla Inc. (NASDAQ:TSLA) has a brand new ‘Gigafactory Texas’ in Austin
Ford Motors (NYSEF) has lined up 3 gigafactories in Tennessee and Kentucky
General Motors (NYSE:GM) has plans to construct 4 gigafactories in joint ventures with LG Chem (OTCPK:LGCLF) and LG Energy Solution (LGES).
SK Innovations plans to construct two battery factories in Georgia
Stellantis N.V. (NYSE:STLA) is teaming up with LG Energy Solution and Samsung SDI to construct two factories elsewhere within the U.S.
Toyota Motor Corp. (NYSE:TM) is constructing one in North Carolina; and …
Volkswagen (OTCPK:VWAGY) is on monitor for a gigafactory in Tennessee.
Story continues
The Department of Energy says the worldwide lithium battery market is anticipated to develop by an element of 5 to 10 within the subsequent decade.
That has EV and battery producers scrambling for offtake agreements with producers and processors.
And it’s not nearly batteries for the $3-trillion EV market …
Some huge cash is being invested into the battery storage trade at giant. That means large-scale battery storage options for photo voltaic and wind energy to counter the intermittent nature of those clear vitality sources.
UBS estimates that the United States vitality storage market might develop to $426 billion over the following decade.
None of it occurs with out graphite.
All of this renders graphite a battery materials of nationwide curiosity and world strategic urgency.
It’s a tricky sentiment for us to digest when you think about that the U.S. hasn’t produced any graphite for many years.
The solely graphite deep processing services on this planet are mentioned to be in China, the place Graphex Group Ltd. (GRFXY, 6128.HK) has been working since 2013.
With nearly all of the world’s graphite coming from China, and most anodes in EV batteries or vitality storage parts requiring graphite, a prime producer like Graphex Group Ltd, with growth plans within the works, could stand to profit tremendously–and will reward buyers within the course of.
Bringing Graphite Home
We suppose Graphex Group Ltd (GRFXY, 6128.HK) is without doubt one of the finest methods for North American buyers to get in on a home-grown producer that’s a part of the commodity supercycle that relies on China.
Whether batteries are manufactured in Asia, Europe or North America, it makes no distinction: Most of the graphite originates in China and is additional processed in China.
Graphex Group’s setup is already spectacular. It’s received main long-term contracts with China, and over the following 5 years, they count on development within the double digits.
Right now, Graphex says it’s producing 10,000 metric tons of spherical graphite, representing round 5% of China’s whole spherical graphite manufacturing.
Over the following three years, armed with long-term processing contracts, Graphex plans to increase that manufacturing to 40,000 metric tons.
The firm reported 28% margins and $51 million in revenues in 2020. When it ramps up manufacturing, we’re anticipating an excellent setup for buyers who had the wherewithal to leap in on graphite at what seems just like the prime time.
This is all made potential on account of the truth that Graphex’s processing services are proper subsequent to the most important flake graphite supply on this planet, in China’s Heilongjiang Province.
And its graphite processing know-how is all protected by a litany of patents–23 in whole–masking every part from manufacturing strategies and gear design to environmental safety and graphene purposes.
These are graphite processing veterans, with a long-running monitor report in an trade the place the barrier to entry is kind of excessive. This isn’t a sport for newcomers.
Bringing this know-how house might save producers some huge cash …
And in an environmentally pleasant method: Graphex (GRFXY, 6128.HK) says it produces pure graphite, not the energy-intensive, coke-based artificial model.
Focusing not solely on manufacturing growth in China however on its know-how processing capabilities all over the world, Graphex’s proprietary know-how could possibly be used to allow miners to improve much less priceless flake graphite into way more priceless uncoated spherical or coated spherical graphite. That’s a distinction of about $600 per ton and as much as $12,000 per ton.
In North America, Graphex says it’s working with downstream firms to create options for the proposed development of services and manufacturing traces for spherical graphite.
Imagine bringing graphite house after virtually whole domination by China simply as a provide crunch begins to influence the $3-trillion EV trade?
But Graphex’s plans go far past : Further afield, Graphex (GRFXY, 6128.HK) says it plans to companion with auto provide chain firms for the manufacturing of spherical graphite, with downstream growth into anode and battery manufacturing.
We haven’t seen a extra bullish graphite push than this …
With 13 gigafactories anticipated to be on the best way within the U.S. alone, and large-scale vitality storage options raking in billions in improvement cash, bringing graphite house could also be some of the enticing funding themes on the market.
And it’s all being finished by trade veterans who’ve already earned one of many prime spots on this battery supplies section.
Electric Vehicle Producers Are Set To Grow In The Coming Years
General Motors (NYSE:GM) is without doubt one of the most revered and acknowledged automakers on the planet, and now they’re branching out and ditching inner combustion engines, different legacy automakers will seemingly observe go well with. Though General Motors has been round for a very long time, it is a turning level for the corporate. They’re making their finest efforts to curb emissions, and it’ll seemingly repay over time. Not solely will it maintain older shareholders completely satisfied, it might attract new investments from extra ESG-focused buyers.
In a significant announcement final 12 months, the highest-selling U.S. automaker mentioned it will supply 30 all-electric fashions globally by the center of this decade. A complete of 40 p.c of the corporate’s U.S. fashions provided will probably be battery electrical automobiles (BEVs) by the tip of 2025.
Recently, GM dropped one other bomb available on the market with the announcement of its new enterprise unit, BrightDrop. The firm is seeking to seize a key share of the burgeoning supply market, with plans to promote electrical vans and providers to business supply firms.
GM isn’t simply betting massive on EVs, both. It’s additionally seeking to capitalize on the autonomous automobile growth. Recently, it introduced that it’s a majority-owned subsidiary, Cruise, has simply acquired approval from the California DMV to check its autonomous automobiles with out a driver. And whereas they’re not the primary to obtain such an approval, it’s nonetheless enormous information for GM.
Cruise CEO Dan Ammann wrote in a Medium publish, “Before the end of the year, we’ll be sending cars out onto the streets of SF — without gasoline and without anyone at the wheel. Because safely removing the driver is the true benchmark of a self-driving car, and because burning fossil fuels is no way to build the future of transportation.”
Ford (NYSE:F) is one other Detroit veteran making waves within the EV world. In addition to brand-new electrical variations of its best-sellers, the F-150 and iconic Mustang, it’s additionally carving out its personal place within the hydrogen race, as nicely. In truth, it lately even unveiled the world’s first-ever gas cell hybrid plugin electrical automobile, the Ford Edge HySeries.
Ford grew to become the best-performing auto trade inventory final 12 months, beating investor favourite Tesla because it doubled down on an all-electric future. 2021 was “truly a breakthrough year for Ford … easily the most important year strategically for the company since the financial crisis,” Morgan Stanley analyst Adam Jonas informed CNBC.
This 12 months noticed hovering orders for the corporate’s Mustang Mach-3 SUV, together with an order for 184 of the EVs from a number of New York City authorities businesses. The order is available in at $11.5 million, placing the worth tag for the Mach-3 SUV at $62,500. Yet persons are shopping for them like sizzling desserts based mostly on order numbers.
And it’s not simply the Mach-3, both. Last month, Ford needed to halt reservations for the upcoming F-150 Lightning pickup truck after hitting 200,000.
Thanks to an enormous inflow of millennial cash and the multi-trillion-dollar inexperienced vitality growth, Tesla Inc. (NASDAQ:TSLA) has emerged as one of many fastest-growing shares of all time.. And although it has been caught in some controversial stances this 12 months, like Elon Musk’s choice to purchase…after which promote bitcoin, the corporate remains to be as promising as ever.
“It’s no surprise that Tesla’s still dominating electric vehicle sales because they’re the only ones that really have viable products in full swing,” IHS Markit affiliate director Michael Fiske informed CNBC.
“In a growth market, it’s extremely challenging to maintain majority market share, regardless of industry. … As we start to move toward a larger and really significant number of manufacturers that are going to be playing in the space, Tesla has to lose share.”
Tesla’s greatest rival in China, Nio Limited (NYSE:NIO) is seeking to tackle the king in its homeland. The firm is ramping up gross sales and trimming its financials, and beginning to make headway domestically.
Nio plans to construct 4,000 battery-swapping stations worldwide by 2025, Reuters has reported, citing the corporate’s president Qin Lihong.
Battery swapping is rising as a faster different to EV charging, which frequently nonetheless takes hours, making EVs much less interesting to potential consumers. Yet swapping a battery might take about as little because it takes to fill a tank of gasoline, which can make this method to charging much more common sooner or later.
Nio plans to start out small, with 700 battery-swapping stations this 12 months, earlier than including one other three thousand and alter over the following 5 years.
Chinese up and comer Xpeng Motors (NYSE:XPEV) has developed an all-electric, totally autonomous automobile that may be ordered with just a few faucets in your cellphone. It contains a vary of 250 miles and can get you from level A to B in much less time than it will take to hail a cab or drive your self. This game-changing firm is about to disrupt the world’s automotive trade with unparalleled comfort and affordability for everybody.
Xpeng has additionally been drawing loads of curiosity from Big Money, managing to lift practically a billion {dollars} from heavy hitters reminiscent of Alibaba, Abu Dhabi’s sovereign wealth fund Mubadala Qatar Investment Authority, Hillhouse Capital, and Sequoia Capital China.
Total EV gross sales in China surged by 154 p.c to three.3 million final 12 months, ZoZo Go estimates. Carmakers BYD—backed by Warren Buffett—in addition to Wuling and Xpeng achieved record-high gross sales in December.
Moreover, China accounted for greater than half of all EVs bought globally in 2021, ZoZo Go says.
This 12 months, strong development is about to proceed as a result of subsidies are not an element, mentioned Michael J. Dunne, CEO at ZoZo Go.
“Until 2020, most EV gross sales in China had been induced by way of subsidies, rebates and quotas. That period is over. NIO, Xpeng and BYD are constructing world-class EVs that Chinese consumers are embracing on their very own deserves. Subsidies are not an element,” Dunne wrote earlier this month.
Li Auto (NASDAQ:LI) is one other up-and-comer within the Chinese electrical automobile area. And whereas it might not be a veteran out there like Tesla and even NIO, it’s shortly making waves on Wall Street. Backed by Chinese giants Meituan and Bytedance, Li has taken a unique method to the electrical automobile market. Instead of choosing pure-electric automobiles, it’s giving customers a alternative with its trendy crossover hybrid SUV. This common automobile might be powered with gasoline or electrical energy, taking the sting off drivers who could not have a charging station or a fuel station close by.
Li Auto has already seen its inventory worth practically double since its IPO. And although it hasn’t fairly returned to its all-time highs, it stays a reasonably secure inventory. It’s already price greater than $30 billion but it surely’s simply getting began. And because the EV growth accelerates into excessive gear, the sky is the restrict for Li and its opponents.
Demand for electrical automobiles has been ramping up steadily for years. But as we’re approaching the tipping level, there’s an issue that many individuals are nonetheless ignoring And that is the place Chargepoint (NYSE:CHPT) is available in, one of many largest charging station networks within the nation.
This main EV infrastructure participant went earlier this 12 months by one of many market’s hottest tendencies. That made them the primary EV charging inventory to have gone public by way of a reverse merger with a particular goal acquisition firm, or SPAC. When it involves the supercharged Level 2 EV charging stations, ChargePoint is the clear chief within the trade.
While Level 1 stations can help you cost a Mercedes B Class 250e in round 20 hours…Level 2 chargers lower that down to only 3 hours to totally cost that very same automobile.
That’s a large distinction for individuals anxious about having to spend practically a day charging their automobiles earlier than getting again on the street. And ChargePoint has a whopping 73% of the market share of networked Level 2 charging stations.
Another charging infrastructure firm, Blink Charging Co. (NASDAQ:BLNK) owns, operates, and supplies EV charging gear and networked EV charging providers within the United States.
Blink Charging actually is a mature firm, having been round since 1998. Its distinctive proposition is that lots of the firm’s charging stations are present in sensible areas, reminiscent of airports and lodges, making it handy for drivers to cost up whereas ready on flights or of their rooms.
Blink has additionally been significantly energetic inking new offers, together with 26 dual-port Level 2 IQ 200 EV charging stations at key Burger King areas throughout the Northeast; 20 Blink-owned IQ 200 electrical automobile charging providers with Illinois’ Blessing Health, and an unique seven-year settlement with Lehigh Valley Health Network for the previous to personal and function charging stations throughout the well being community’s in depth portfolio of areas.
GreenPower Motor (TSX:GPV) is an thrilling firm that produces larger-scale electrical transportation. Right now, it’s primarily targeted on the North American market, however the sky is the restrict because the stress to go inexperienced grows. GreenPower has been on the frontlines of the electrical motion, manufacturing reasonably priced battery-electric busses and vans for over ten years. From faculty busses to long-distance public transit, GreenPower’s influence on the sector can’t be ignored.
NFI Group (TSX:NFI) is one other considered one of Canada’s most fun electrical mass-transit makers. Though it has not but rebounded from January highs, NFI nonetheless presents buyers a promising alternative to capitalize on the electrical automobile growth at a reduction. In addition to its more and more constructive monetary studies, additionally it is one of many few within the enterprise that truly pay dividends out to its buyers. This is big as a result of it offers buyers a possibility to achieve publicity to this booming trade whereas the inventory is affordable and maintain regular till the market lastly discovers this gem.
Another option to acquire publicity to the electrical automobile trade is thru AutoCanada (TSX:ACQ), an organization that operates auto-dealerships by Canada. The firm carries all kinds of latest and used automobiles and has all sorts of monetary choices obtainable to suit the wants of any client. While gross sales have slumped this 12 months as a result of COVID-19 pandemic, AutoCanada will seemingly see a rebound as each shopping for energy and the demand for electrical automobiles will increase. As extra new thrilling EVs hit the market, AutoCanada will certainly be capable of experience the wave.
Lithium Americas Corp. (TSX:LAC) is considered one of America’s most important and promising pure-play lithium firms. With two world-class lithium tasks in Argentina and Nevada, Lithium Americas is well-positioned to experience the wave of rising lithium demand within the years to come back. It’s already raised practically a billion {dollars} in fairness and debt, exhibiting that buyers have a ton of curiosity within the firm’s bold plans.
Lithium America is just not wanting over the rising stress from buyers for accountable and sustainable mining, both. In truth, considered one of its major objectives is to create a constructive influence on society and the atmosphere by its tasks. This contains cleaner mining tech, robust office security practices, a variety of alternatives for workers, and robust relationships with native governments to make sure that not solely are its staff being taken care of however native communities, as nicely.
Celestica (TSX:CLS) is a key firm within the useful resource growth on account of is position as one of many prime producers of electronics in North America. Celestica’s big selection of merchandise contains however is just not restricted to communications options, enterprise and cloud providers, aerospace and protection merchandise, renewable vitality, and even healthcare tech.
Due to its publicity to the renewable vitality market, Celestica’s future is tied hand-in-hand with the inexperienced vitality growth that’s sweeping the world for the time being. It helps construct sensible and environment friendly merchandise that combine the newest in energy technology, conversion and administration know-how to ship smarter, extra environment friendly grid and off-grid purposes for the world’s main vitality gear producers and producers.
Teck Resources (TSX:TECK) could possibly be one of many best-diversified miners on the market, with a broad portfolio of Copper, Zinc, Energy, Gold, Silver and Molybdenum belongings. It’s even concerned within the oil scene! With its free money stream and a decrease volatility outlook for base metals together with a rising push for copper and zinc to create batteries, Teck might emerge as one of many 12 months’s most fun miners.
Though Teck has not fairly returned to its January highs, it has seen a promising rebound since April lows. In addition to its constructive trajectory, the corporate has seen a good quantity of insider shopping for, which tells shareholders that the administration group is severe about persevering with so as to add shareholder worth. In addition to insider shopping for, Teck has been added to numerous hedge fund portfolios as nicely, suggesting that not solely do insiders imagine within the firm, but additionally the sensible cash that’s actually driving the markets.
By. Tom Kool
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Forward-Looking Statements
This publication accommodates forward-looking data which is topic to a wide range of dangers and uncertainties and different components that would trigger precise occasions or outcomes to vary from these projected within the forward-looking statements. Forward wanting statements on this publication embrace that the worldwide vitality transition will proceed as anticipated and that electrical automobiles will proceed to develop in market share and acceptance; that demand for electrical automobile batteries and the part supplies and minerals used to provide electrical automobile batteries will proceed to develop considerably; that the marketplace for graphite and associated merchandise will proceed to increase and obtain double digit development within the subsequent a number of years ;that there will probably be shortages in China, U.S. and globally of the graphite vital to provide electrical automobile batteries; that Graphex Group Limited (the “Company”) can leverage its present operations and repute in China to seize market share of worldwide graphite demand; that the Company can increase its enterprise operations to the U.S. and European markets and acquire important market share for the provision of graphite for electrical automobile batteries; that the Company can leverage its proximity to graphite mines to increase its operations and seize market share for world graphite demand; that the Company can obtain its enterprise plans and goals as anticipated. These forward-looking statements are topic to a wide range of dangers and uncertainties and different components that would trigger precise occasions or outcomes to vary materially from these projected within the forward-looking data. Risks that would change or stop these statements from coming to fruition embrace that the worldwide vitality transition could not proceed as anticipated and that different sorts of different vitality automobiles could also be developed and acquire market share over present sorts of electrical automobiles; that demand for electrical automobile batteries as presently produced and the part supplies and minerals used to presently produce electrical automobile batteries could also be lower than anticipated for numerous causes together with the event of other supplies and applied sciences; that the marketplace for graphite and associated merchandise could not increase and obtain development as anticipated; that for numerous causes, together with manufacturing of graphite or different applied sciences by different opponents of the Company, there might not be shortages of or will increase in demand for graphite in China, U.S. and/or globally as anticipated or in any respect; that the Company could also be unable to leverage its present operations and repute in China to seize substantial market share of worldwide graphite demand; that the Company could also be unsuccessful within the growth of its enterprise operations to the U.S. and European markets and fail to achieve important market share for the provision of graphite for electrical automobile batteries in China and/or globally; that the Company could also be unable to leverage its proximity to graphite mines to increase its operations and seize market share for home and world graphite demand; that the enterprise of the Company could also be unsuccessful for numerous causes. The forward-looking data contained herein is given as of the date hereof and we assume no accountability to replace or revise such data to replicate new occasions or circumstances, besides as required by legislation.
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