Renascor Resources (ASX: RNU) shares are up 36%. RNY shares have jumped on the news that China is to place export licences upon the export of graphite, that essential material for making batteries. It’s possible to overstate the importance of this - licences do not necessarily mean lower volumes. Further, most battery anode manufacturing is done in China anyway, so few western plants will be deprived. Still, it’s a worry: “China has imposed export controls on graphite, a material used in electric vehicle batteries, as Beijing hits back at US-led restrictions on technology sales to Chinese companies. China, which dominates global supply chains for the mineral, will require special export permits for three grades of graphite, the commerce ministry and the General Administration of Customs said on Friday.”
That worry obviously benefits Renascor: “Renascor Resources Limited (RNU) is an Australian-based company focused on the development of the Siviour Graphite Project and the exploration for graphite, copper, gold, uranium and other minerals. Renascor has an extensive tenement portfolio, holding interests in the key mineral provinces of South Australia.”
Renascor Resources share price from Google Finance
As we’ve said before about Renascor Resources: “Renascor Resources (ASX: RNU) (OTCPK: RSNUF) shares are down 22%. RNU shares dropped on the presentation of the Siviour Battery Anode project plans. Which is a bit odd as that report shows that it’s value creating, profitable and they’ve even already got much of the finance to be getting along with. All of those are things we’d like to see in a plan so the idea that the shares become worth less upon its presentation is odd. But then even before this latest Renascor had lost some 40% from its peak. The world just seems less interested in graphite than it used to be.”
This has also been true of Tirupati Graphite: “But as we’ve pointed out years back about Tirupati, and also about Northern Graphite, there’s very rarely an absolute shortage of a mineral. As demand rises more people go looking for ways to supply. Just given the size of the planet - and that it’s all made up of only those 90 elements - that means some to many will be able to supply. That means supply increases and therefore there’s pressure on pricing. As Tirupati says: “The price realised remained similar to H1 previous year in spite of subdued market prices during the current year period.” Yep, even with the EV revolution prices are subdued - that means supply is increasing along with demand.”
This restriction upon Chinese exports rather changes that calculation, as with Syrah Resources: “Syrah Resources (ASX: SYR) shares are up 44%. SYR shares have jumped in reaction to the Chinse licenses on exports of graphite. It’s not so much that China is the world’s major producer, it’s that it’s the world’s major processor of the material into battery ready form. It’s also not that this is about the create massive problems for battery production because it isn’t - most of the world’s battery production retains access as it’s in China, or Chinese companies. What might matter in the future is the price for future battery graphite production and processing - thus the impact upon Syrah Resources.”
It remains to be seen how much these export curbs bite. But for the moment the idea that non-China producers rise in value seems obvious enough.
