Canadian graphite producers prepare for boom – by Pav Jordan (Globe and Mail – May 2, 2012)

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Move over rare earths – graphite is the new darling of the mining industry. Canadian graphite miners are angling to be high-end suppliers to the global lithium ion battery market, where companies such as LG, Samsung, Mitsubishi and Hitachi are fuelling growing demand for new technologies ranging from smartphones and laptops to electric cars.

After decades of near-dormancy in the graphite industry, an increasing number of companies are racing to produce flake graphite, the purest natural form of the mineral touted for its lightness, extreme resistance to heat and high conductivity.

The mineral is a major component of lithium batteries – lighter and more powerful than traditional batteries – that are finding their way into ever broader markets, from laptops and cordless power tools to hybrid electric vehicles.

“If electric cars start happening, this is going to go through the roof,” said Simon Moores, a graphite market specialist for Industrial Minerals, a group that gathers data on the graphite and other mineral industries.

Global graphite demand is about 1.14 million tonnes, split nearly evenly between the large flake variety and amorphous graphite used for industrial purposes, according to Industrial Minerals.

“People talk about a 1.6-million-tonne market by 2020, meaning you’ll need 600,000 tonnes extra graphite in coming years, but that’s a bullish figure. I think it’s closer to 200,000 tonnes,” he said ahead of a graphite-industry conference in Toronto this week.

Shifting graphite demand trends are driving prices for the flake variety to all-time highs, a fact not lost on investors or the companies scrambling to produce it. Market capitalizations are bouncing higher for companies across the board, from early stage explorers to others closer to actual production.

Investors’ burgeoning romance with the graphite industry follows another love affair with rare earth companies, key to technological innovations in components for vent fans, jet engines and laser-guided systems for smart bombs.

Close to a dozen of those companies are in Toronto this week for the Graphite Express conference, a 3½ hour event that is the first of its kind focused on the financial community and which experts are likening to speed-dating for prospective producers and potential investors.

About half of the public graphite companies operating in Canada will be at the conference, but only a few can boast of projects even close to the production stage.

The first to produce commercial graphite will likely be Ontario Graphite Ltd., followed by Northern Graphite Corp. and Focus Metals Inc.

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