The Best ASX Graphite Stocks
to buy Now In
March 2024

Check out our Industry Experts’ analysis on ASX graphite stocks

The Best ASX Graphite Stocks
to buy Now In
March 2024

Check out our Industry Experts’ analysis on ASX graphite stocks

Understanding ASX Graphite Stocks

With the rapid growth of the lithium-ion battery market, the demand for graphite, a crucial component in these batteries, is skyrocketing. The exponential increase in electric vehicles (EVs) and consumer electronics is pushing this trend further. Our analysis reveals the best three ASX-listed graphite stocks to capitalize on this rising tide. In this comprehensive guide, we delve into their operations, projects, and potential to provide an in-depth understanding of the graphite market dynamics.

The global graphite market is experiencing a boom, largely driven by the growing demand for lithium-ion batteries. These batteries are integral to various industries, including the burgeoning EV market and consumer electronics. Their rising demand directly impacts the demand for both natural and synthetic graphite, components used in the production of these batteries. Synthetic graphite, produced from petroleum coke or coal tar pitch, offers high purity and consistent properties but has a significant carbon emissions footprint.

On the other hand, natural graphite, derived from mining, has a lower environmental impact and is cost-effective, making it a preferred choice for many battery manufacturers. Flake graphite, a type of natural graphite, is particularly valuable among battery minerals. Its unique properties make it ideal for battery anode material, outperforming its counterpart, synthetic graphite. The flake graphite market is further segmented into coarse flake graphite and fine flake, with the former garnering a premium owing to its suitability as battery anode material for lithium-ion battery production.

Graphite's Role in the Future Energy Market

With the rapid growth of the lithium-ion battery market, the demand for graphite, a crucial component in these batteries, is skyrocketing. The exponential increase in electric vehicles (EVs) and consumer electronics is pushing this trend further. Our analysis reveals the best three ASX-listed graphite stocks to capitalize on this rising tide. In this comprehensive guide, we delve into their operations, projects, and potential to provide an in-depth understanding of the graphite market dynamics.

The global graphite market is experiencing a boom, largely driven by the growing demand for lithium-ion batteries. These batteries are integral to various industries, including the burgeoning EV market and consumer electronics. Their rising demand directly impacts the demand for both natural and synthetic graphite, components used in the production of these batteries. Synthetic graphite, produced from petroleum coke or coal tar pitch, offers high purity and consistent properties but has a significant carbon emissions footprint.

On the other hand, natural graphite, derived from mining, has a lower environmental impact and is cost-effective, making it a preferred choice for many battery manufacturers. Flake graphite, a type of natural graphite, is particularly valuable among battery minerals. Its unique properties make it ideal for battery anode material, outperforming its counterpart, synthetic graphite. The flake graphite market is further segmented into coarse flake graphite and fine flake, with the former garnering a premium owing to its suitability as battery anode material for lithium-ion battery production.

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Who Should Invest in Graphite ASX Stocks and When?

Determining whether or not to invest in graphite stocks requires an understanding of the broader market trends and company-specific factors.

Who Should Invest:

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Ethical investors who value sustainable practices and low carbon emissions might lean towards companies that produce natural graphite. The production of natural graphite, compared to synthetic graphite, tends to have a lower environmental impact, aligning with the values of ethical investors.                                                                                                                                                                          

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Another timing strategy could involve tracking the graphite prices. If graphite prices are projected to rise due to increasing demand and limited supply, it might be an opportune time to invest in graphite stocks.

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Investors who have a keen interest in the electric vehicle (EV) market, consumer electronics, and renewable energy sectors could consider investing in graphite stocks. As the lithium-ion battery market continues to grow, fuelled by the increasing popularity of EVs and the expanding renewable energy sector, the demand for graphite, is expected to surge.

When To Invest:

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Investors should consider the global graphite supplies, the demand and supply dynamics of the graphite market, and the projected growth of the lithium-ion battery industry.

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Periods of increasing demand for graphite, coupled with supply constraints, could present a good investment opportunity. This could occur when there's a surge in EV sales or significant growth in the renewable energy sector.

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Another timing strategy could involve tracking the graphite prices. If graphite prices are projected to rise due to increasing demand and limited supply, it might be an opportune time to invest in graphite stocks.

However, it's crucial to remember that investing always comes with risks. Potential investors should perform thorough due diligence and consider seeking professional financial advice before making any investment decisions.

Risks and Challenges in the ASX Graphite Stocks

Regulatory changes, especially those related to environmental conservation and carbon emissions, can impact graphite mining and production. Companies need to adhere to strict environmental regulations, and any non-compliance can lead to hefty penalties and reputational damage. Certain jurisdictions that are home to substantial amounts of graphite are also renowned for demanding state ownership in individual graphite projects and companies.

Our Top 3 ASX Graphite Stocks

     Syrah Resources (ASX:SYR)

Syrah Resources, the operator of the Balama Graphite Project in Mozambique and an Active Anode Material (AAM) plant on the American state of Louisiana, is a leading graphite producer globally.

     Evolution Energy Minerals (ASX:EV1)

Evolution Energy Minerals is a significant player amongst aspiring ASX graphite developers, owing to its flagship Chilalo Graphite Project in Tanzania. Chilalo has an Indicated and Inferred Resource of 67mt at 5.4% Total Graphitic Carbon (TGC).

     Black Rock Mining (ASX:BKT)

Black Rock Mining is an ASX-listed company working on the Mahenge Graphite Project in Tanzania. This project boasts the fourth largest JORC-compliant graphite resource in the world with a mineral resource estimate of 213 million tonnes.

Top 3 ASX Graphite Stocks to buy

Syrah Resources (ASX:SYR)

Syrah Resources, the operator of the Balama Graphite Project in Mozambique and an Active Anode Material (AAM) plant on the American state of Louisiana, is a leading graphite producer globally. Balama is known for its high-quality flake graphite, with a large proportion of coarse flake suitable for battery anode production. The whole graphite project has an impressive resource estimate of over 100 million tonnes at 16% TGC (Total Graphitic Content), assuring long-term supply. As for its AAM plant (named Vidalia after the town in which it is located), it has a 11.25ktpa capacity, began production last year and has several key customers including Tesla.

This company is the only operating vertically integrated natural graphite AAM supplier outside of China. Syrah Resources (ASX:SYR) hasn't had the smoothest share price growth given its less than perfect operational history at Balama. However, we think finally looks to be heading in the right direction. It has a deal with Tesla to supply it with anode material, albeit subject to final qualification which is expected no later than the end of May 2024.

Evolution Energy Minerals (ASX:EV1)

Evolution Energy Minerals is a significant player amongst aspiring ASX graphite developers, owing to its flagship Chilalo Graphite Project in Tanzania. Chilalo has an Indicated and Inferred Resource of 67mt at 5.4% Total Graphitic Carbon (TGC). It has a post-tax NPV of US$331m and post-tax IRR of 36%.
This project is designed to produce battery-grade graphite concentrates, targeting the rapidly expanding lithium-ion battery industry. Furthermore, its proximity to infrastructure, strategic energy resources including ports and power, gives Evolution a strategic advantage in supplying the lithium-ion battery market. It has been a tough ride to this point. This company and previous owners of Chilalo have been drilling at Chilalo since 2014.

And it has struggled with investor sentiment due to sovereign risk - sudden changes to the Mining Act in 2017 (including forced renegotiation of existing agreements, a mandatory 16% government shareholding, and restriction of repatriation of funds derived from mining) meant the company couldn't secure funding. Since then President John Magufuli died in 2021, things have looked up for EV1.

The new President Samia Suluhu Hassan has appeared to be more mining friendly and the Company now has a Formal Framework with the state.

Black Rock Mining (ASX:BKT)

Black Rock Mining is an ASX-listed company working on the Mahenge Graphite Project in Tanzania. This project boasts the fourth largest JORC-compliant graphite resource in the world with a mineral resource estimate of 213 million tonnes. It has a 44.8% IRR, a US$1.1.16bn post-tax NPV, a 63.1% AISC margin and a payback period of 3.8 years.

The company aims to produce large flake graphite, chip material is in high demand for use in expandable, graphite sheets and lithium-ion batteries. Black Rock has received multiple off-take agreements and positive feedback from potential customers on its pilot plant graphite concentrates. Most notably, it had a binding offtake deal with South Korean steel manufacturer POSCO. This makes it one of the most promising of graphite concentrate stocks on the ASX. Its share price has lagged for a couple of reasons, including the scars remaining from sovereign risk issues in Tanzania and the requirement for funding. It will need a total of US$510m and you'd be forgiven for thinking it should have secured it by now.

But BKT is gradually securing finance, with an initial US$59.6m from the Development Bank of Southern Africa approved in October 2023. The company plans commence production in the first half of CY26.

Frequently Asked Questions

Besides lithium-ion batteries, graphite finds applications in steel production, where it's used as a refractory material due to its high heat resistance. Flake graphite is used in the production of expandable graphite, which is widely used in heat and fire-resistant applications.

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