Evolution Minerals flags graphite potential in the emerging hydrogen vehicle supply chain

Speaking to another fairly empty grand conference room at Pan Pacific for the second day of Africa Down Under, Evolution Energy Minerals (ASX:EV1) announced its plans to produce ESG-friendly graphite foil for sale into the EV market. 

Worth noting is that Evolution did not just reference good-old-battery EVs, but Managing Director Phil Hoskins specifically pointed out the higher counts of graphite foil needed in hydrogen fuel cell electric vehicles, or, FCEVs. 

FCEVs are a staple ambition for hydrogen producers everywhere, with the vehicles expected to significantly compete with battery-electricity-only EVS (called BEVs). 

FCEVs boast superior mileage credentials to BEVs, using a mix of clean hydrocarbon fuel (assuming it’s green hydrogen powering the engine) and battery storage to provide an EV solution that can go further, faster, with less charging time needed. 

What is graphite foil? 

Graphitic carbon isn’t exactly hard to find, but, turning it into the kind of downstream carbon products needed in EV batteries of any kind is hard to pull off. 

Hoskins noted at the conference event that China, in fact, hold a 100% share of the downstream graphite market. To refine your product, you need to go through Xinping. 

Graphite foil is one such downstream product refined from graphite ore, which tends to present as ‘flakes’ of metal in amidst ore mined in hard rock settings. 

The foil itself (which for all intents and purposes looks like a slightly darker and more resilient aluminium foil) is used in EV batteries, as well as in chemical engineering, including oil and gas. 

While one can find graphite foil for sale on Alibaba for under AUD$10, the type of foil needed in EV supply chains (in tier-1 jurisdictions) is a slightly different kettle of fish. 

Flake size the key 

The thing is, not all graphite is equal. Spherical graphite, for instance, cannot be made without having large coarse flake size at the upstream end of the equation; nor can many other downstream products. 

In fact, the price of graphite upstream producers can get from various customers depending on the size of the flakes of the graphite. Whereas gold may reach a benchmark price no matter where you sell it, graphite does not work quite the same way. 

It is not surprising, then, Hoskins was eager to boast to the sparse crowd that Evolution’s Chilalo graphite project in Tanzania boasts the coarsest graphite flakes in the world. 

Upcoming DFS update

That flake size will become a crucial element of an upcoming re-work of the company’s Definitive Feasibility Study for the Chilalo project, which Hoskins forewarned would see increased capex costs due to inflation. 

However, the high values the company expects to see its coarse flake product receive, as well as ongoing demand dynamics, are set to offset a higher cost profile. 

By 2025, at least 13 new graphite mines as big as Chilalo will be needed to satisfy graphite demand globally, Hoskins noted, and this probably isn’t going to happen.

What this means is that high graphite prices are here to stay, and likely have room to climb. 

Evolution's six month charts show a company being slammed by risk-off sentiment (and a disproportionate amount of attention given to lithium, over graphite.) But with a new Chilalo DFS on the way, are investors overlooking the company?

Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Evolution Energy Minerals was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.