The following commodity supercycle might begin and finish with Chinese language graphite, the one most essential 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 turn into a really distinctive graphite bridge between China and the US.
The timing is essential: Battery and EV makers at the moment are fretting about graphite, the battery materials that makes up 30% of each battery and serves because the unfavorable finish, or the “anode”.
With out it, there could also be no lithium-ion battery, and whereas battery and EV makers have been busy attempting 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 Prime 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 language 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 expertise to North America, too.
A Looming International Graphite Scarcity?
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 US alone might trigger a furor alongside the availability chain.
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Tesla Inc. (NASDAQ:TSLA) has a brand new ‘Gigafactory Texas’ in Austin
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Ford Motors (NYSEF) has lined up 3 gigafactories in Tennessee and Kentucky
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Normal Motors (NYSE:GM) has plans to construct 4 gigafactories in joint ventures with LG Chem (OTCPK:LGCLF) and LG Vitality Resolution (LGES).
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SK Improvements plans to construct two battery factories in Georgia
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Stellantis N.V. (NYSE:STLA) is teaming up with LG Vitality Resolution and Samsung SDI to construct two factories elsewhere within the U.S.
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Toyota Motor Corp. (NYSE:TM) is constructing one in North Carolina; and …
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Volkswagen (OTCPK:VWAGY) is on observe for a gigafactory in Tennessee.
The Division of Vitality says the worldwide lithium battery market is predicted 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 business at giant. Meaning 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 US 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 one graphite deep processing services on this planet are stated 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, might stand to learn drastically–and will reward traders within the course of.
Bringing Graphite Residence
We predict Graphex Group Ltd (GRFXY, 6128.HK) is likely one of the finest methods for North American traders to get in on a home-grown producer that’s a part of the commodity supercycle that depends upon China.
Whether or not batteries are manufactured in Asia, Europe or North America, it makes no distinction: A lot of the graphite originates in China and is additional processed in China.
Graphex Group’s setup is already spectacular. It’s obtained main long-term contracts with China, and over the following 5 years, they count on development within the double digits.
Proper now, Graphex says it’s producing 10,000 metric tons of spherical graphite, representing round 5% of China’s complete spherical graphite manufacturing.
Over the following three years, armed with long-term processing contracts, Graphex plans to develop that manufacturing to 40,000 metric tons.
The corporate reported 28% margins and $51 million in revenues in 2020. When it ramps up manufacturing, we’re anticipating an incredible setup for traders who had the wherewithal to leap in on graphite at what seems just like the prime time.
That 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 expertise is all protected by a litany of patents–23 in complete–protecting every thing from manufacturing strategies and gear design to environmental safety and graphene purposes.
These are graphite processing veterans, with a long-running observe file in an business the place the barrier to entry is kind of excessive. This isn’t a sport for newcomers.
Bringing this expertise 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 expertise processing capabilities world wide, Graphex’s proprietary expertise may very well be used to allow miners to improve much less useful flake graphite into way more useful 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 building of services and manufacturing strains for spherical graphite.
Think about bringing graphite house after virtually complete domination by China simply as a provide crunch begins to influence the $3-trillion EV business?
However Graphex’s plans go far past : Additional afield, Graphex (GRFXY, 6128.HK) says it plans to accomplice 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 probably the most engaging funding themes on the market.
And it’s all being performed by business veterans who’ve already earned one of many prime spots on this battery supplies section.
Electrical Automobile Producers Are Set To Develop In The Coming Years
Normal Motors (NYSE:GM) is likely one of the most revered and acknowledged automakers on the planet, and now they’re branching out and ditching inside combustion engines, different legacy automakers will possible observe swimsuit. Although Normal Motors has been round for a very long time, this can be a turning level for the corporate. They’re making their finest efforts to curb emissions, and it’ll possible repay over time. Not solely will it maintain older shareholders blissful, it might attract new investments from extra ESG-focused traders.
In a significant announcement final 12 months, the highest-selling U.S. automaker stated it will provide 30 all-electric fashions globally by the center of this decade. A complete of 40 % of the corporate’s U.S. fashions supplied will probably be battery electrical autos (BEVs) by the tip of 2025.
Just lately, GM dropped one other bomb available on the market with the announcement of its new enterprise unit, BrightDrop. The corporate is trying to seize a key share of the burgeoning supply market, with plans to promote electrical vans and providers to industrial supply firms.
GM isn’t simply betting large on EVs, both. It’s additionally trying to capitalize on the autonomous car increase. Just lately, it introduced that it’s a majority-owned subsidiary, Cruise, has simply obtained approval from the California DMV to check its autonomous autos with no driver. And whereas they’re not the primary to obtain such an approval, it’s nonetheless large information for GM.
Cruise CEO Dan Ammann wrote in a Medium submit, “Earlier than the tip of the 12 months, we’ll be sending vehicles out onto the streets of SF — with out gasoline and with out anybody on the wheel. As a result of safely eradicating the driving force is the true benchmark of a self-driving automobile, and since burning fossil fuels is not any strategy to construct the way forward for transportation.”
Ford (NYSE:F) is one other Detroit veteran making waves within the EV world. Along with 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 properly. In reality, it not too long ago even unveiled the world’s first-ever gas cell hybrid plugin electrical car, the Ford Edge HySeries.
Ford grew to become the best-performing auto business inventory final 12 months, beating investor favourite Tesla because it doubled down on an all-electric future. 2021 was “actually a breakthrough 12 months for Ford … simply crucial 12 months strategically for the corporate because the monetary disaster,” Morgan Stanley analyst Adam Jonas advised 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 Metropolis authorities companies. The order is available in at $11.5 million, placing the worth tag for the Mach-3 SUV at $62,500. But persons are shopping for them like scorching desserts primarily based on order numbers.
And it’s not simply the Mach-3, both. Final 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 increase, 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 resolution to purchase…after which promote bitcoin, the corporate continues to be as promising as ever.
“It’s no shock that Tesla’s nonetheless dominating electrical car gross sales as a result of they’re the one ones that basically have viable merchandise in full swing,” IHS Markit affiliate director Michael Fiske advised CNBC.
“In a development market, it’s extraordinarily difficult to keep up majority market share, no matter business. … As we begin to transfer towards a bigger and actually important variety of producers which can be going to be enjoying within the house, Tesla has to lose share.”
Tesla’s largest rival in China, Nio Restricted (NYSE:NIO) is trying to tackle the king in its homeland. The corporate 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 regularly nonetheless takes hours, making EVs much less interesting to potential consumers. But 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 fashionable 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 language up and comer Xpeng Motors (NYSE:XPEV) has developed an all-electric, absolutely autonomous automobile that may be ordered with a couple of faucets in your cellphone. It incorporates 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 ready to disrupt the world’s automotive business with unparalleled comfort and affordability for everybody.
Xpeng has additionally been drawing loads of curiosity from Huge Cash, managing to boost practically a billion {dollars} from heavy hitters similar to Alibaba, Abu Dhabi’s sovereign wealth fund Mubadala Qatar Funding Authority, Hillhouse Capital, and Sequoia Capital China.
Complete EV gross sales in China surged by 154 % 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.
Furthermore, China accounted for greater than half of all EVs bought globally in 2021, ZoZo Go says.
This 12 months, strong development is ready to proceed as a result of subsidies are now not an element, stated Michael J. Dunne, CEO at ZoZo Go.
“Till 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 language consumers are embracing on their very own deserves. Subsidies are now not an element,” Dunne wrote earlier this month.
Li Auto (NASDAQ:LI) is one other up-and-comer within the Chinese language electrical car house. And whereas it might not be a veteran out there like Tesla and even NIO, it’s rapidly making waves on Wall Road. Backed by Chinese language giants Meituan and Bytedance, Li has taken a unique method to the electrical car market. As an alternative of choosing pure-electric vehicles, it’s giving shoppers a alternative with its fashionable crossover hybrid SUV. This fashionable car may be powered with gasoline or electrical energy, taking the sting off drivers who might not have a charging station or a gasoline 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 steady inventory. It’s already value greater than $30 billion but it surely’s simply getting began. And because the EV increase accelerates into excessive gear, the sky is the restrict for Li and its opponents.
Demand for electrical autos has been ramping up steadily for years. However 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 way of one of many market’s hottest traits. That made them the primary EV charging inventory to have gone public by way of a reverse merger with a particular objective acquisition firm, or SPAC. In the case of the supercharged Stage 2 EV charging stations, ChargePoint is the clear chief within the business.
Whereas Stage 1 stations assist you to cost a Mercedes B Class 250e in round 20 hours…Stage 2 chargers reduce that down to only 3 hours to completely cost that very same car.
That is an enormous distinction for folks apprehensive about having to spend practically a day charging their autos earlier than getting again on the street. And ChargePoint has a whopping 73% of the market share of networked Stage 2 charging stations.
One other charging infrastructure firm, Blink Charging Co. (NASDAQ:BLNK) owns, operates, and offers EV charging gear and networked EV charging providers in the US.
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 places, similar to airports and resorts, making it handy for drivers to cost up whereas ready on flights or of their rooms.
Blink has additionally been significantly lively inking new offers, together with 26 dual-port Stage 2 IQ 200 EV charging stations at key Burger King places throughout the Northeast; 20 Blink-owned IQ 200 electrical car charging providers with Illinois’ Blessing Well being, and an unique seven-year settlement with Lehigh Valley Well being Community for the previous to personal and function charging stations throughout the well being community’s in depth portfolio of places.
GreenPower Motor (TSX:GPV) is an thrilling firm that produces larger-scale electrical transportation. Proper now, it’s primarily targeted on the North American market, however the sky is the restrict because the strain to go inexperienced grows. GreenPower has been on the frontlines of the electrical motion, manufacturing inexpensive battery-electric busses and vans for over ten years. From college 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 enjoyable electrical mass-transit makers. Although it has not but rebounded from January highs, NFI nonetheless presents traders a promising alternative to capitalize on the electrical car increase at a reduction. Along with its more and more optimistic monetary stories, it’s also one of many few within the enterprise that truly pay dividends out to its traders. That is large as a result of it provides traders a chance to realize publicity to this booming business whereas the inventory is affordable and maintain regular till the market lastly discovers this gem.
One other strategy to achieve publicity to the electrical car business is thru AutoCanada (TSX:ACQ), an organization that operates auto-dealerships by way of Canada. The corporate carries all kinds of recent and used autos and has all varieties of monetary choices obtainable to suit the wants of any client. Whereas gross sales have slumped this 12 months as a result of COVID-19 pandemic, AutoCanada will possible see a rebound as each shopping for energy and the demand for electrical autos will increase. As extra new thrilling EVs hit the market, AutoCanada will certainly be capable to trip 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 initiatives in Argentina and Nevada, Lithium Americas is well-positioned to trip 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 traders have a ton of curiosity within the firm’s formidable plans.
Lithium America will not be wanting over the rising strain from traders for accountable and sustainable mining, both. In reality, considered one of its major targets is to create a optimistic influence on society and the setting by way of its initiatives. This contains cleaner mining tech, sturdy office security practices, a spread of alternatives for workers, and powerful relationships with native governments to make sure that not solely are its workers being taken care of however native communities, as properly.
Celestica (TSX:CLS) is a key firm within the useful resource increase on account of is position as one of many prime producers of electronics in North America. Celestica’s wide selection of merchandise contains however will not be restricted to communications options, enterprise and cloud providers, aerospace and protection merchandise, renewable vitality, and even healthcare tech.
As a result of its publicity to the renewable vitality market, Celestica’s future is tied hand-in-hand with the inexperienced vitality increase that’s sweeping the world in the meanwhile. It helps construct good and environment friendly merchandise that combine the most recent in energy technology, conversion and administration expertise to ship smarter, extra environment friendly grid and off-grid purposes for the world’s main vitality gear producers and producers.
Teck Sources (TSX:TECK) may very well be one of many best-diversified miners on the market, with a broad portfolio of Copper, Zinc, Vitality, Gold, Silver and Molybdenum belongings. It’s even concerned within the oil scene! With its free money circulate 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 enjoyable miners.
Although Teck has not fairly returned to its January highs, it has seen a promising rebound since April lows. Along with its optimistic trajectory, the corporate has seen a good quantity of insider shopping for, which tells shareholders that the administration crew is severe about persevering with so as to add shareholder worth. Along with insider shopping for, Teck has been added to quite a lot of hedge fund portfolios as properly, suggesting that not solely do insiders imagine within the firm, but additionally the good cash that’s actually driving the markets.
By. Tom Kool
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ
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Ahead-Wanting Statements
This publication incorporates forward-looking info which is topic to a wide range of dangers and uncertainties and different elements that would trigger precise occasions or outcomes to vary from these projected within the forward-looking statements. Ahead wanting statements on this publication embody that the worldwide vitality transition will proceed as anticipated and that electrical autos will proceed to develop in market share and acceptance; that demand for electrical car batteries and the element supplies and minerals used to supply electrical car batteries will proceed to develop considerably; that the marketplace for graphite and associated merchandise will proceed to develop 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 supply electrical car batteries; that Graphex Group Restricted (the “Firm”) can leverage its present operations and repute in China to seize market share of worldwide graphite demand; that the Firm can develop its enterprise operations to the U.S. and European markets and achieve important market share for the availability of graphite for electrical car batteries; that the Firm can leverage its proximity to graphite mines to develop its operations and seize market share for world graphite demand; that the Firm can obtain its enterprise plans and aims as anticipated. These forward-looking statements are topic to a wide range of dangers and uncertainties and different elements that would trigger precise occasions or outcomes to vary materially from these projected within the forward-looking info. Dangers that would change or stop these statements from coming to fruition embody that the worldwide vitality transition might not proceed as anticipated and that different varieties of different vitality autos could also be developed and achieve market share over present varieties of electrical autos; that demand for electrical car batteries as at the moment produced and the element supplies and minerals used to at the moment produce electrical car batteries could also be lower than anticipated for varied causes together with the event of different supplies and applied sciences; that the marketplace for graphite and associated merchandise might not develop and obtain development as anticipated; that for varied causes, together with manufacturing of graphite or different applied sciences by different opponents of the Firm, 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 Firm could also be unable to leverage its present operations and repute in China to seize substantial market share of worldwide graphite demand; that the Firm could also be unsuccessful within the growth of its enterprise operations to the U.S. and European markets and fail to realize important market share for the availability of graphite for electrical car batteries in China and/or globally; that the Firm could also be unable to leverage its proximity to graphite mines to develop its operations and seize market share for home and world graphite demand; that the enterprise of the Firm could also be unsuccessful for varied causes. The forward-looking info contained herein is given as of the date hereof and we assume no duty to replace or revise such info to mirror new occasions or circumstances, besides as required by legislation.
DISCLAIMERS
This communication is for leisure functions solely. By no means make investments purely primarily based on our communication. Now we have not been compensated by Graphex however might sooner or later be compensated to conduct investor consciousness promoting and advertising and marketing for OTCQX: GRFXY. The data in our communications and on our web site has not been independently verified and isn’t assured to be appropriate. Value targets that now we have listed on this article are our opinions primarily based on restricted evaluation, however we aren’t skilled monetary analysts so worth targets are to not be relied on.
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