Friday, June 14, 2024


Dhaka Tribune

Sovereign Metals up 13% on graphite testing - aided by China’s export limitations

Sovereign is dual listed in London and Australia - the UK listing seems to lag Oz


Update : 02 Nov 2023, 05:22 PM

Sovereign Metals (LON: SVM) (ASX: SVM) shares are up 13% in Aurstalia and 4% in London today. Whether that’s the UK lagging Oz or leading it is uncertain - the time zones mean the two markets aren’t really open at the same time. It’s also true that the Metals part of the name is not really appropriate. For they’re graphite - carbon - miners. The bump today is their announcement that a decent sized test is underway. Can the graphite from their potential mine really made into the top notch stuff desired by the battery market?

The announcement: “Bulk sampling program underway at Kasiya to extract 100 tonnes of ore to produce over 1,000kg of natural graphite for lithium-ion battery anode testwork and product qualification. The upscaled graphite qualification program will support upcoming project studies with our strategic partner, Rio Tinto. Sovereign and Rio Tinto have agreed to collaborate to qualify graphite from Kasiya, with a particular focus on supplying the spherical purified graphite (SPG) segment of the lithium-ion battery anode market. Previous testwork confirmed Kasiya's graphite to have near perfect crystallinity and high purity - both key attributes for suitability in lithium-ion battery feedstock. Kasiya's recent Pre-Feasibility Study (PFS) confirmed it could be one of the world's largest natural graphite producers at 244kt per annum with the lowest cash operating costs globally at US$404/t and the lowest CO2-footprint”

That’s all good stuff, obviously.

Sovereign Metals share price from Google Finance

But it’s not necessarily enough. As we’ve said about Tirupati Graphite: “ 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.”” The price depends not just upon demand but also supply.

Those Chinese restrictions did benefit 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.” We’d also note that some of the froth has come off Syrah since then.

Our attitude toward the whole graphite market is summed up in this about Renascor Resources: “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.””

It might seem a little odd that this is so given the battery market. But graphite just doesn’t seem to be exciting the markets that much. Well, given that it sells at the $500 and $600 a tonne level perhaps that’s sensible too.


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