Tesla's Potential North American Battery Metals Supply Chain Contenders -- Anodes and Graphite

Tesla has started making anodes in their new battery production line, but would still need to buy the anode material. This suggests they ideally need a North American anode material supplier.

The new battery cell anode will increase the silicon slightly from about 10% in the older cells. I have not looked at silicon companies as there is minimal silicon or opportunity there. Silicon holds more electrons and increases energy density, but it has limits in use for now due to the large expansion and contraction that can cause cracking. A new trend maybe wrapping the anode in graphene to prevent cracking as Samsung Electronics [XLON:SMSN] (OTC:SSNLF) has done with their graphene battery. One small graphene company with potential is ZEN Graphene Solutions [TSXV:ZEN] (OTCPK:ZENYF). Of interest, they also make a 99% effective graphene viricidal mask for COVID-19.

For a background on the global anode suppliers, here is my article "A Look At The Top Li-Ion Battery Anode Manufacturers". It states that 67% of global anodes are made by just 4 Chinese companies - Shenzhen BTR New Energy Materials Co. Ltd. (supplies Panasonic/Tesla), Hitachi Chemical, Shanshan Technology Co., Ltd., and Mitsubishi Chemical.

### **Syrah Resources Limited [ASX:SYR][GR:3S7](OTCPK:SYAAF)(OTC:SRHYY)**

Syrah is the largest flake graphite producer in the world and is progressing their Battery Anode Material [BAM] plant in Louisiana, USA. Syrah supply BTR with graphite, which supplies Panasonic/Tesla with anodes. Syrah's production has been massively cut back due to graphite oversupply, so supply deals would now be in question. They look a good chance to supply Tesla with anode material from their developing USA BAM plant.

### **NextSource Materials Inc. [TSX:NEXT] [GR:1JW] (OTCQB:NSRCF)**

NextSource Materials Inc. is a mine development company based in Toronto, Canada, that's developing its 100%-owned, Feasibility-Stage Molo Graphite Project in Madagascar. The company also has the Green Giant Vanadium Project on the same property. One big plus is their modular approach, which can allow for a super-low start-up CapEx of just US$25m.

### **Westwater Resources (WWR) (formerly Alabama Graphite)**

Westwater’s Coosa Project in Alabama, USA, is expected to be the first US domestic producer and processor of battery graphite materials.

* Westwater Resources Announces Start of Pilot Plant Program for Battery Graphite

* Westwater Resources is developing the Coosa Graphite Project - a natural flake graphite producing facility and a graphite mine on nearly 42,000 acres in Alabama by investing $118 million. This project is located on what was once known as the Alabama Graphite Belt which witnessed substantial graphite production in the 1800s and early-1900s. Westwater Resources holds 100% of the mineral rights over its acreage.
* Westwater Resources reported negative $10.13 million of cash flows and a net loss from continuing operations of $6.93 million for the first nine months of this year (2020)
* At the end of 2017, Westwater Resources (NASDAQ:WWR) announced plans to acquire Alabama Graphite in order to fast track US battery materials development.

### **Mason Graphite [TSXV:LLG] [GR:M01] (OTCQX:MGPHF)**

Mason Graphite is a Canadian graphite mining and processing company focused on the development of the Lac Guéret project located in northeastern Quebec, where the graphite grade is believed by management to be among the highest in the world.

The company is currently progressing their Lac Guéret project towards production, as well as advancing work program on value added graphite products such as spherical graphite production.

### **Nouveau Monde Graphite [TSXV:NOU] (OTCQX:NMGRF)**

Nouveau Monde Graphite owns the Matawinie graphite project near Montreal, Canada. Nouveau Monde’s research & development consortium is advancing their carbon-neutral battery anode program. Successful anode materials tests have been completed and Nouveau Monde is currently progressing the detailed engineering and procurement for its integrated battery anode material process, with commissioning of the demonstration facility scheduled for mid-2021.

### **Talga Resources [ASX:TLG] [GR:TGX] (OTCPK:TLGRF)**

Talga is building an integrated graphite anode facility in Sweden fed by graphite from Talga’s Vittangi Project. They plan to produce 19,000tpa of anode production for 22 years from 2023.

### **Magnis Energy Technologies Ltd. [ASX:MNS] (OTC:URNXF)**

Magnis sources their graphite from their 100% owned Nachu Graphite Project in Tanzania. They are also partnering to develop Li-ion gigafactories in the USA and Australia. Magnis owns 53.39% of the planned New York gigafactory, with C4V owning 45.18%.

A plus for Magnis is they have the inventor of lithium-ion batteries, Professor Stanley Whittingham (2019 Nobel Prize winner), as a Magnis Non-Executive Director, helping with R&D.

* The U.S. is currently the largest producing country of the synthetic graphite feedstocks (all oil-based), followed by Japan, which produces from both coal- and oil-based products. The dominant global suppliers are Phillips 66 (with refineries in Texas and the U.K.) and GrafTech (also in Texas).
* Synthetic graphite is playing a larger role in the production of advanced batteries. Its main source? Fossil fuel refining.
	+ https://www.greentechmedia.com/articles/read/graphite-the-biggest-threat-to-batteries-green-reputation
* “Batteries with silicon anodes promise to make devices last more than 20 percent longer on a single charge.” Consequently, investors have been pouring money into startups racing to be first-to-market with silicon anodes.
* https://www.nanalyze.com/2020/07/lithium-ion-batteries-improve/

### NNO:

* + Nano One Materials (NNO:CN) which just announced “the development of a coated, single crystal cathode material for lithium ion batteries that is providing up to 4 times improvement in longevity.”
	+ Nano One is a technology company with a patented and scalable industrial process for the production of low cost, high performance cathode powders used in lithium ion batteries. These unique materials are being designed to add value to electric vehicles and grid storage batteries in the global push for a zero-emission future.

* EAF
	+ https://www.graftech.com/home/default.aspx
* PSX
	+ https://www.phillips66.com

### Northern Graphite (TSXV:NGC,OTCQB:NGPHF)

* + Northern Graphite is currently developing its Bissett Creek project in Canada, which already has a full feasibility study and its major environmental permit.

### Graphite One (TSXV:GPH,OTCQB:GPHOF)

* + GPHOF] (the “Company” or “GPH”) is exploring, with the intent to develop its Graphite One Project (the “Project”), whereby the Company could potentially become the dominant American producer of high grade Coated Spherical Graphite (“CSG”) that is integrated with a domestic graphite resource.

### Eagle Graphite (TSXV:EGA)

* + Eagle Graphite owns one of only two natural flake graphite production facilities in North America. Its project, known as the Black Crystal graphite quarry, is located in Washington in the US.

### Alabama Graphite (TSXV:CSPG)

* + is another company aiming to bring back graphite mining in the US. It holds two flake graphite projects in Alabama: Coosa and Bama. Respectively, they are in Coosa County and Chilton County, and Alabama Graphite says both are “within the heart of a previously producing region.” Alabama Graphite has completed a resource estimate and PEA for Coosa, and in July 2017 it awarded AGP Mining Consultants the contract for a feasibility study for the project.
	+ On June 6, 2019, the Company entered into the PA with Lincoln Park to place up to $10.0 million in the aggregate of the Company’s common stock on an ongoing basis when required by the Company over a term of 24 months.
	+ Inception-to-date through December 31, 2019, the Company has sold 1,694,534 shares of common stock for gross proceeds of $5.8 million. ($5.8M/1.7M = $3.43 per share)

### Syrah Resources (ASX:SYR,OTC Pink:SYAAF)

* + Syrah Resources, which operates the Balama graphite project in Mozambique — the largest natural graphite project outside China

### Graphite News:

* Demand for graphite is closely tied to steelmaking and manufacturing, but is now also closely associated with the production of lithium-ion batteries. Interestingly, these batteries actually contain 10 to 30 times more graphite than lithium.
* “There is excess production capacity in China and a large new mine in Africa, which created an oversupply of the 'small flake' used in the battery/EV industries,” he said. “These markets are going to be huge, but in the shorter term, demand has been growing more slowly than most predicted.”
* “While future graphite demand driven by lithium-ion batteries, fire-retardant expandable graphite and heat-dispersion materials is strong, the current market proved not to be deep enough to absorb a new large-volume producer,
* “Because of the EV revolution — and energy storage system applications more generally — graphite demand is rising rapidly,”
* The amount of new graphite supply that is needed even if EVs only become moderately successful is quite significant, and, as most comes from China, Bowes also believes there is an opportunity for new western sources of supply.
* “China imported more than 53,000 metric tons of natural graphite in the first three quarters of 2019 (mainly from Mozambique and Madagascar), compared to just 12,000 metric tons in the same period of 2018,” she said. “Imports are thought to have declined in Q4 with the reduced production from Syrah Resources (ASX:SYR,OTC Pink:SYAAF).”
* “The synthetic space has seen strong growth in China due to the lifecycle benefits that the country’s producers can obtain compared to spherical graphite. On the natural side, there is still major growth from battery markets, particularly in other parts of Asia where producers have overcome technical challenges using a natural-dominant anode blend,”
* “Africa is logistically useful for Chinese customers (and) has major graphite resources, and China has a recent history of investing in the country, which has relative cheap labor and other overheads,” “China itself is on a program of moving away from lower-value production (mining) towards downstream product, but also its own graphite resources are becoming deeper and more expensive to mine.”
* “When looking in particular to batteries, you have to look at what type of material can actually supply those anodes — it is not all flake graphite or synthetic graphite,” he added. “In the longer term, what you see is that the graphite market, both natural and synthetic, isn’t set up for the type of demand batteries will be pushing in the next few years.”
* All of these batteries use graphite as a critical, non-substitutable constituent. According to analysts, batteries accounted for an estimated 182,400 tonnes of graphite consumption in 2018. Demand for batteries grew by a compound annual growth rate of 16.1% between 2008 and 2018 (Roskill, 2019). Based on Roskill’s base case scenario for electric vehicle demand, this rate of growth could almost double to 20.2% over the next decade, with graphite consumption in batteries reaching 1,900,000 tonnes in 2028. Consumption of graphite in Li-ion batteries currently accounts for around 84% of the battery market for graphite but this could rise to 95-98% by 2028. Competition between natural and synthetic graphite is expected to continue in Li-ion batteries with the choice coming down to price, performance and availability. Synthetic graphite consumption by anode manufacturers is expected to grow because of the concentration of the industry in China; however, natural flake graphite demand is forecast to grow at a higher rate because of natural graphite’s performance and cost efficiencies when compared to synthetic graphite.
* The real challenge for battery manufacturers is that the primary source of battery-grade graphite is China, presenting the global battery industry with significant risks, including supply chain management risks, economic risks and environmental unsustainability. Also, critical domestic production is absent in the United States. A recent Presidential Executive Order includes graphite on its list of minerals critical to the safety and security of the United States. With no domestic graphite production of any kind, the United States is presently required to source all of its battery graphite from China.
* One of the limiting factors of the Li-ion battery is its anode—the graphite. Lithium is added to graphite when charging and removed as the battery is used. Graphite anodes are used in nearly all Li-ion batteries, but recent research has sought to capitalize on a better anode solution—silicon. With a theoretical capacity of more than 10 times that of graphite, silicon anodes can at least double the capacity of graphite-anode batteries. However, it is this very ability to absorb lithium and expand during charging that is the problem: The silicon breaks down quickly.

## **NEO Battery Materials Ltd.** (TSXV: NBM) (OTCQB: NBMFF)

NEO intends to become a silicon anode active materials supplier to the electric vehicle industry.

For battery materials, the silicon anode market is facing an accelerated uprising due to the material's potential to store up to ten times more lithium-ions compared to current graphite anodes used in EV batteries. In a report by The Korea Economic Daily, the industry is expected to experience a growth of a 70% CAGR until 2025 to a market size of USD 2.6 Billion to 3.4 Billion, capturing 15% of the total anode market compared to the current 3%.

**NEO Battery Materials Ltd.** (TSXV: NBM) (OTCQB: NBMFF) recently announced that over the past three months the Company has successfully completed the Silicon (Si) Anode Production Capacity Upscaling Project.

From the initial production rate of several grams per hour for manufacturing silicon anode materials at the lab-scale, NEO's engineering team has accomplished to expand the rate to a level of several kilograms per hour. This is a result of improving productivity by more than 1,000-fold, and the success of the Project at this level has given stronger validation for the 120-ton semi-commercial plant that is scheduled to be commissioned by the end of next year. In addition to increasing the throughput rate (production speed) from this Project, NEO has reduced the amount of solvents used in the one-pot synthesis by more than 50%, thereby significantly lowering the processing cost of the Si anode material.

## Enovix Corporation (NASDAQ: ENVX) (NASDAQ: ENVXW)

Enovix Corporation develops and manufactures 3D silicon lithium-ion batteries. Its lithium-ion battery uses 3D cell architecture and silicon anode to increase energy density and maintain high cycle life. The company has strategic partnerships with Cypress Semiconductor, Intel Corporation, and Qualcomm. Enovix Corporation was formerly known as MicroAzure Corp. The company was founded in 2006 and is based in Fremont, California. It has production plants in Fremont, California; and Manila, the Philippines.

Enovix Corporation (NASDAQ: ENVX) (NASDAQ: ENVXW), a leader in the design and manufacture of next generation 3D Silicon™ Lithium-ion batteries, announced it had achieved a major milestone-manufacturing battery cells from its first automated factory in Fremont, Calif. Additionally, the company announced it designed, fabricated and released pre-production quantities of a new cell design for Augmented Reality (AR) glasses for a top-tier consumer electronics company.

From the news: "This is a major accomplishment for Enovix and I'm incredibly proud of our team," said Harrold Rust, Co-founder, President and Chief Executive Officer of Enovix. "Manufacturing the first cell off of our automated line is proof that our machine set is ready for production. It's the culmination of years of long hours, dedication and hard work from our world-class team and it's further proof that we are on track to meet our goal of not only delivering a battery with up to 110% greater energy density, but also we're on target for commercial production in Q1 2022 and first product revenue in Q2 2022."