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National Observer
18-07-2025
- Business
- National Observer
At North America's only graphite mine, big battery dreams face a global crush
As the home of North America's only operating graphite mine and a score of projects queued for development, Canada should be in pole position in the race to capitalize on the vast deposits of a mineral vital to the energy transition. Yet the 35-year-old open pit mine in Lac des Îles, Que., is struggling. Mine owner Northern Graphite has historically sold its product—a dark-grey, naturally occurring form of carbon—to a range of US industrial customers that use it in everything from steelmaking and manufacturing lubricants to pencils and racing bike frames. But it has yet to ship a single ounce of graphite to clean economy customers: the makers of lithium-ion batteries for electric vehicles and grid-linked energy storage. In May, the company said it needed to immediately raise $10 million to expand its operation or face the possibility of shutting down by year's end. 'We have over $300 million in assets, but our market cap is $11 million,' Northern Graphite CEO Hugues Jacquemin told Canada's National Observer last week, discussing the value of the company's shares on the stock market. 'This tells you how precarious a situation we are in in the current market,' he said, speaking during a visit to the mine, located 150 kilometres northwest of Montreal, by a European delegation working on hatching a new strategic industrial partnerships with Canada. 'China has been driving down prices in a very explicit strategy to deter Western investment in the critical mineral supply chains — and it has been working,' says Bentley Allan, lead author on a recent Transition Accelerator critical minerals report. Graphite is high on Ottawa's priority list of 34 critical minerals — a group of metal, minerals and rare earth elements key to energy transition and defence technologies — as it seeks to reindustrialize Canada's mining sector while pivoting away from an overreliance on trade with the US in the wake of the Trump administration's tariffs and annexation threats. Prospects could hardly appear more bullish. The global market for natural graphite, such as is hauled out of Lac des Îles, and synthetic versions derived from polluting coking coal, stood at US$30 billion ($41 billion) last year, according to Precedence Research. That figure is forecast to more than double to US$65 billion by 2034. Macquarie, an investment advisory group, in a recent market outlook calculated that six million tonnes a year of graphite alone would be needed globally for EV and electricity grid batteries by the end of this decade. For perspective, Northern Graphite's mine produces 10-15,000 tonnes of graphite ore a year and is ramping up to 25,000 tonnes. 'We need to scale this mine to be much bigger than it is and start building new mines,' Jacquemin said. 'We need to develop the industrial supply chain that will take these raw materials and turn them into a finished product and then to market.' But the company — and wider Canadian graphite mining sector — faces a formidable challenge: China. The Asian superpower monopolizes the global market for so-called 'black lead,' producing and processing nearly 80 per cent of total supply. This gives Beijing the ability to control prices at will and with it, affords it huge geopolitical influence on countries that are in desperate need of the material — including the US, which yesterday levied anti-dumping duties of 93.5% on imports of Chinese graphite. Chinese market manipulation and slowing growth in sales for EVs in North America made 2024 'a year to forget', said GraphiteHub, a market research site, noting that global trade tensions and international efforts to break China's chokehold on graphite — such as the high-level critical mineral 'action plan' agreed at the recent G7 summit — would be narratives to watch. 'Broader geopolitical context' Commercializing Canada's graphite resource — along with that of other critical minerals such as lithium, cobalt, nickel and rare earth metals central to the emerging clean economy — is an extraordinary challenge at a time of uncertainty over international trade, politics and financing, sector observers say. 'The broader context for graphite, like so many critical minerals, is now geopolitical,' said Bentley Allan, lead author on a new report on critical minerals from the Transition Accelerator, a Canadian think tank. 'China has been driving down prices in a very explicit strategy to deter Western investment in the critical mineral supply chains — and it has been working,' he told Canada's National Observer. After hitting highs of $1,000-plus a tonne in early 2023, graphite's price chart has since looked like a worrying EKG monitor, dropping to lows close to $400/tonne at the end of 2024. 'We have been talking about critical minerals for years and there has been a loss of investor confidence because it hasn't translated into an economically viable price,' Jacquenin said. Allan believes Ottawa could foil Beijing's tactics by employing a pricing mechanism like a so-called Contract for Difference, which has a 'floor' and 'ceiling' for critical minerals mined in Canada. This way, he said, the government could provide price certainty for investors, covering the difference if market prices fall below the band and sharing any profit above it. Canada's been talking about critical minerals for years and there has been a loss of investor confidence because it hasn't translated into an economically viable price. 'Otherwise, graphite is not going to move forward in Canada,' said Allan, an associate professor at Johns Hopkins University's Sustainable Energy Institute in the US. A pricing policy is currently not part of Canada's critical minerals strategy launched in 2022 with $3.8 billion in federal support for exploration, processing, manufacturing, and recycling of these key metals and minerals, and another $1.5 billion for mine-related infrastructure aimed at giving projects an early boost. Only a handful of critical mineral projects have progressed meaningfully since, with early-stage mine developments in British Columbia, Manitoba, Ontario and Quebec. 'The government's strategy aims to build a resilient, sustainable sector that delivers results across the country and furnishes Canada's economy and national security,' Marie Martin, a spokesperson for Natural Resources Canada, told Canada's National Observer. She said miners can use 'a range of tools including tax incentives, funding programs and other financing mechanisms' to get projects into production. But the economics of a mine hinge heavily on 'downstream' customers — a battery or EV maker, in the case of graphite — to secure the supply they need through offtake agreements with the mine operator, said Chris Williams, an analyst with Adamas Intelligence, a market intelligence company. Downstream buyers in North America and Europe are 'not committing in sufficient numbers' to support new graphite projects, he said, adding that the Canadian government will most likely have to bridge the funding gap to develop a critical mineral ecosystem — from mining through processing to recycling — here that can help the West curb its dependency on Chinese graphite. 'China's strategy of supporting loss-leading mining operations creates a competitive barrier around its more valuable midstream supply chain, a model that the West would benefit from emulating,' Williams said. Northern Graphite's Lac des Îles graphite mine may be the only one producing product today, but another 10 projects are in early development in Quebec stretching along a mineral-rich southwest-to-northeast axis starting near Notre Dame de Pontmain, 140 kilometres north of Ottawa. Capturing the graphite 'corridor' Moving a mine from discovery to production can take on average 17.9 years in Canada, compared to 15.7 years globally, 14.5 years in Australia and 13 years in the US, S&P Global Market Intelligence, a research firm, said in 2023. 'If permitting was streamlined to be less red tape heavy, we could get moving very fast,' Jacquemin said. The industry has long laid blame for slow-rolling regulatory processes for the time it takes to open a new mine, but market factors and financing can impact a project as well. Prime Minister Mark Carney's Liberal government has pushed through legislation empowering his cabinet to override regulations, guidelines and laws to speed up energy, mining and infrastructure projects. A new Major Projects Office is being set up with the aim of fast-tracking 'national interest projects' to two years from five years. But mining executives say it's not clear how the new federal office will coordinate with provincial regulators and First Nations. The challenges, however, don't end once the ore is out of the ground. Canada's lack of critical mineral processing plants (known as the 'midstream') remains a significant obstacle to the country's export ambitions. Northern Graphite aims to lead the charge into this key industrial link of the supply chain. The miner recently partnered with BMI, a Canadian investment group, that last December bought a 2,800-acre former pulp and paper complex in Baie-Comeau, Quebec to turn it into a 'multimodal' industrial hub — including a graphite processing plant. The huge $2 billion project, called Norderra, would be built-out in four stages, eventually powered by up to 400 megawatts of hydroelectricity, with first graphite shipments from the site's deep water port as early as 'late 2027 or early 2028.' Financing for the lead-off phase has yet to be finalized. Norderra, Jacquemin said, could one day anchor a graphite mining and processing corridor with Quebec's deposits developed into mines producing 500,000 tonnes of graphite concentrate annually, for export to global markets via the Great Lakes-Atlantic Seaway. 'We have to reindustrialize for different types of materials,' Jacquemin said. 'Once we used forestry products to produce paper, now we will be using graphite to produce batteries.' Northern Graphite's five-year plan for the Lac des Îles mine — assuming analysts' forecasts are right and graphite gets a boost from demand for energy transition technologies — is still waiting on the $10 million expansion that would gear up production to 213,000 tonnes of graphite ore a year. 'The government, financial institutions, and industry need to get moving together to seize this opportunity now,' he said. 'Canada needs to put its stamp on this, to say 'We are a leader in critical minerals, and to back that up with high-quality Canadian products. It is time to show we are serious.'
Globe and Mail
18-07-2025
- Business
- Globe and Mail
Canada's only graphite miner faces uncertain future as it holds out hope of government financing
The head of Northern Graphite Corp. NGC-X is optimistic that Ottawa will provide a key part of a make-or-break financing package needed to keep North America's only graphite mine in operation. Security of supply for domestic critical minerals mines has rarely been a more urgent issue as Canada struggles with an entrenched trade war with the United States. Prime Minister Mark Carney has made developing domestic resource projects one of the biggest priorities for his government. Ottawa-based Northern Graphite operates the Lac des Îles graphite mine in Quebec. In operation since 1989, the existing pit is due to run out of ore before the end of the year. To extend the life of the mine into the 2030s, an investment of $10-million is urgently needed. Graphite, alongside lithium, cobalt and copper, is one of several critical minerals used in low-carbon energy and is a key input in the defence sector. Mr. Carney has repeatedly stressed that Canada must expand production of critical minerals in order to meet new NATO spending requirements, and a shutdown of the Quebec mine could weaken the country's ability to meet those commitments. New NATO target will require Canada to spend $150-billion annually on defence, Carney says Despite extensive talks with the public and private sector, Northern Graphite has been unable to raise new funding. With debt of US$40-million, and a cash position of only about $300,000, the company could also eventually be facing a liquidity crisis. Hugues Jacquemin, chief executive officer of Northern Graphite, said in an interview this week that while the current situation is alarming, he's hopeful the federal government will come through with a major piece of the financing, a step that would keep the mine in operation. 'They recognize how dire the situation is, and there's quite a strong sense of urgency from them to come and find a way to help us,' he said. 'So I'm quite confident that we'll get there.' Industry Minister Mélanie Joly, whose riding is in Quebec, is aware of the strategic importance of the asset. Last Friday, when asked in a press conference about the mine, she warned about the dangers of overreliance on one country in critical minerals. China dominates the production and refining of graphite worldwide and it has abused its position to stomp out foreign competition. Bloomberg News on Thursday reported that the U.S. Commerce Department was set to impose preliminary anti-dumping duties of 93.5 per cent on Chinese imports of graphite after concluding the Chinese were unfairly subsidizing the industry. Despite the need for Canada to diversify further away from China in graphite, it's unclear whether Ottawa will ultimately invest in the mine. When asked in an e-mail from The Globe and Mail whether the government will step in, a spokesperson for Ms. Joly did not provide a comment by Thursday afternoon. Even though its market capitalization is only about $18-million, and its shares trade for 14 cents apiece on the TSX Venture Exchange, Northern Graphite commands a high profile internationally. Last week, the company hosted an EU delegation that included Stéphane Séjourné, executive vice-president of the European Commission for Prosperity and Industrial Strategy. Remarking on his visit, Mr. Séjourné, in the same press conference that Ms. Joly participated in on Friday, stressed the importance of more co-operation between Canada and the EU in critical minerals. Northern Graphite primarily sells its graphite to U.S. industrial customers, who use the metal in a range of applications including brake pads, industrial lubricants, fuel cells and in defence applications such as the manufacturing of ammunition, cannons, missiles and in paint for fighter jets. Owing to the mine's proximity to its customer base and the quality of its product, the company is able to charge its customers up to three times as much as comparable Chinese producers. Despite all of these advantages, investors have been reluctant to put new money into the company. Part of the issue is that the U.S. industrial segment isn't a big market. But the bigger problem is that investors are unsure about whether the company can compete against China in the electric-battery market, a much bigger segment that Northern Graphite hopes to compete in. Opinion: Facing such fancy Chinese EVs, do Western carmakers even have a future? 'The Chinese have been so aggressive on their pricing that it seeds a lot of doubt in investors' minds whether graphite is a commodity they want to invest in,' Mr. Jacquemin said. 'What they're scared of is the geopolitical world changes, and then suddenly the Chinese flood the market with graphite at very low prices, and the mine is not able to make money.' Apart from operating the Quebec mine, Northern Graphite also owns a graphite mine in Namibia that is idle and which it hopes to eventually restart. It also has plans to build a processing plant in Europe that would see the company's EV capabilities expand exponentially. Toronto-based Sprott Resource Streaming and Royalty Corp. is the company's major debt creditor. Earlier in the year, Northern Graphite breached covenants on some of its debt and said it was working with Sprott to amend its debt package.
The Market Online
25-04-2025
- Business
- The Market Online
Two top critical mineral stocks the market is missing
Any time a mining company's long-term runway doesn't mesh with recent stock performance, active investors in the space owe it to themselves to verify whether or not there's value to be harvested. This is especially true when target commodities are critical minerals, whose supplies are expected to play essential roles in the development of the global industrial complex. In the newest edition of Stockhouse's Weekly Market Movers, I'll present you with two strong candidates for market misperception, whose production-stage assets and attractive growth profiles tell a more encouraging story than their stock prices imply. Each company sat down with us for an interview over the past week. Ur-Energy Our first critical mineral stock worth noting is Ur-Energy, market capitalization C$388.53 million, a uranium miner operating its flagship Lost Creek in-situ recovery facility in Wyoming. The facility has produced nearly 3 million pounds of triuranium octoxide (U 3 O 8 ) since 2013, making it one of the largest in the United States. As of 2024, Lost Creek is estimated to contain 12.7 million pounds eU 3 O 8 measured and indicated and 6.1 million pounds eU 3 O 8 inferred. Based on U 3 O 8 futures trading at US$65.65 at the time of writing, this represents over US$1.2 billion in resources in the ground. Ur-Energy has its sights set on production growth through expansions at Lost Creek and ongoing development of its Shirley Basin facility, also in Wyoming, since making a positive investment decision in March 2024. Shirley Basin is estimated to contain 8.8 million pounds eU 3 O 8 measured and indicated, of which 6.4 million are expected to be recovered, adding over US$400 million in potential revenue for the company. Mine start-up is slated for early 2026. Supported by an ongoing uranium shortage and global reactor demand projected to as much as triple through 2040 – thanks to uranium's unique status as an energy-dense and carbon-free fuel source – Ur-Energy's production pipeline is clearly essential to U.S. energy security, granting the company a differentiated path on the road to generating shareholder value. Investors have yet to appreciate the multi-bagger potential at play here, cutting Ur-Energy stock (TSX:URE) in half year-over-year, while enjoying only a 22.99 per cent return since 2020, despite the price of uranium losing approximately 30 per cent and gaining 97 per cent, respectively. John Cash, Ur-Energy's chairman, president and chief executive officer (CEO), spoke with Stockhouse's Lyndsay Malchuk about construction and production updates for Q1 2025. Watch the interview here. Northern Graphite Northern Graphite, market capitalization C$19.41 million, stands alone as the only flake graphite producer in North America from its Lac des Iles mine in Quebec, making it a key link in the global supply chain for products critical to the green economy – including fuel cells, graphene and anode material for lithium-ion batteries and EVs – all of which rely on graphite's light weight, excellent conductivity and stability under high temperatures to perform as expected. Concurrent with production, Northern Graphite's Battery Materials Division operates a laboratory in Frankfurt developing anode materials to advance the performance of lithium-ion batteries. The company is in discussions with infrastructure leader BMI Group to build a battery anode material facility at a former paper mill in Baie-Comeau, Quebec. The lab also markets Northern Graphite's Porocarb products, a line of synthetic conductive carbon additives designed to optimize energy storage systems. When we consider that China controls about 80 per cent of graphite supply and that global demand could as much as quadruple by 2040, according to the International Energy Agency, it isn't hard to make ends meet and see that Northern Graphite's first-mover advantage and presence both up and downstream make it a go-to name for conflict-free graphite. Investors have been more pessimistic in their assessment of the company, with Northern Graphite stock (TSXV:NGC) enduring a 14.71 per cent loss since 2020, as the price of graphite wavers in wait for a rise in EV demand expected to triple demand for the critical mineral by 2040. Hugues Jacquemin, Northern Graphite's CEO, sat down with Lyndsay Malchuk to shed light on the company's battery anode collaboration with BMI Group. Watch the interview here. Thanks for reading! I'll see you next week for a new edition of Stockhouse's Weekly Market Movers. Here's last week's article, in case you missed it. Join the discussion: Find out what everybody's saying about these top critical mineral stocks on the Ur-Energy Inc. and Northern Graphite Corp. Bullboards and check out Stockhouse's stock forums and message boards. This is sponsored content issued on behalf of Ur-Energy Inc. and Northern Graphite Corp., please see full disclaimer here. (Top image, generated by AI: Adobe Stock)
