Natural Resources

From the Ground Up

  • Edge Editorial Team

    At Edge Investments, we make investing in small cap stocks enjoyable and edge-ucational. We are here to teach you about investing, keep you up to date on news, and help connect you with companies that you may have a desire to invest in.

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What if we told you there could be a shortage of materials required for electric vehicle (EV) batteries within the next decade? Or that the shortage was already happening? Or that a semiconductor shortage could have a substantial effect on the EV world in general? 

Would you believe us? 

Well, I sure hope so. 

Electric vehicle demand is compounding at a rather alarming rate; it reached 2.5 million (as expected) in 2020 and is supposed to increase by another 70% by the end of the year. Keep in mind that obtaining the materials used to make EV batteries is no easy feat. Semiconductors, which have been tied closely to automotive companies, take 18 weeks to produce, on average. This does anything but help when it comes to the rapidly growing demand for EV batteries. This demand ended up seeing a massive spike in Q4, which was the same quarter that semiconductor companies expected to be sleepy. 

Boy, were they wrong.  

Supply chain issues prevented semiconductor companies from being able to react quickly enough and now, consumer electronic companies, among others, are having competition spring up from automakers when it comes to buying semiconductor “chips. This means that, in the midst of flourishing demand, also comes a shortage of supply. Essentially, there is a bidding war for the chips! 

Energy storage is an aspect of renewable energy that amplifies the demand for graphite, along with the demand from the consumer electronic titans of the world.

“For renewable energy to be successful, storage is essential. Current technology predicates that all energy-storage products need graphite for the anode. Automakers who are looking for batteries/energy storage cells for EVs will therefore face competition for raw materials,” says Bharat Parashar, Ceylon’s Chief Executive Officer. 

So, when graphite, which is used in the anodes of lithium-ion batteries, is compounding in scarcity, it makes us feel good to own a piece of one of the only publicly traded graphite producers out there.

What Will Automakers Do About Thin Supply? 

Graphite, among lithium, nickel, and manganese, now have a lot of automaker eyes on them and, while you can find low-quality versions of these rare earth elements (REEs) in myriad places, the challenge is finding high-quality veins and extracting them from the ground.  

Much like semiconductor fabrication plants, mines require years and millions of dollars to build. 

“REEs are everywhere but the reason they are not mined in environmentally-friendly jurisdictions is they require a level of leeching that makes it a dirty business to extract them,” says Lewis Black, CEO of international raw materials development company, Almonty. 

Due to its supply chain vulnerability and importance in national security, the U.S. government has designated graphite to be a critical mineral. The amount of graphite needed to produce the anode material for EV batteries is projected to surge to 1.75 million metric tons by 2028.

That is 800% increase from the levels needed in 2017. 

In case you haven’t heard of Ceylon Graphite (CANADA: CYL – U.S.: CYLYF – EUROPE: CCY): 

  1. You should read our full-length piece outlining the company, then come back. 
  1. As a reminder, Ceylon owns several (already established!) graphite mines in Sri Lanka, home of the world’s highest grade of graphite. 

Not only are these mines fully owned by Ceylon, but they have been invested in to run environmentally-friendly, sustainable operations. Lowest-cost, highest-grade, sustainably extracted supply is coming from this massive collection of graphite-packed land. 

If Ceylon’s Graphite Is Up for Grabs, Who’s Taking? 

Initially, the United States had second thoughts about depending on foreign sources. They had their mind set on domestic production in order to meet the blistering new demand of EVs. Once realizing the amount of capital (and time) required to develop a mine, it wasn’t long before they found themselves seeking alliancesIn addition to the massive expense that production would be on their own territory, the U.S. would be disadvantaging their own customers, having lost all competitive edge on pricing when all is said and done.

A strong partnership with graphite producers from a foreign source is seemingly the only way to build a strong, diverse supply chain that can stay afloat in a competitive market. 

You can’t build a business entirely built on temporary scarcity, though. If the price of rocks has gone up, more people are going to start trying to find those rocks. That’s why Ceylon is developing out a strong portfolio of intellectual property already, keeping ten steps ahead of the industry. 

At the beginning of March, Ceylon Graphite filed a patent application for its most recent development. This technological property takes the form of a Biocidal Nanocomposite material, which will be used as a multi-purpose biocidal coating. In simper terms, this formula of Ceylon’s has been designed to prevent and fight off the transmission of pathogens (which are any microorganisms that can cause disease). Pathogens occur on contaminated work surfaces such as touchscreens, door handles, and work stations.

If Ceylon is going to satisfy global demand, it must meet global standards. Considering the fact that there is currently a global pandemic, having a continuous method of efficient contact-killing technology is crucial. In case you haven’t connected the dots yet, this also allows Ceylon to earn additional revenue from licensing the technology and develop new dedicated customers over time. Such is the brainwork of newly appointed technical team, DrsSiva and Mallika Bohm.

The Doctors remain very in tune within the world of disinfection, with Dr. Mallika Bohm stating “the total antimicrobial coating market exceeded US$3.2 billion globally in 2019 and is estimated to grow at more than 10.4% CAGR between 2020 and 2026 [according to Global Market Insights]. The biggest winning factor of Ceylon’s new antimicrobial product is the ability to be tailored enhance a variety of surface coating systems. Its versatility has been tested, with excellent results in anticipation of a successful patent application.

The key intent for this new development led by Dr. Bohm is using friendlier materials, that aren’t restricted in quantity, due to toxic nature. This patent can provide Ceylon with an edge amongst the antimicrobial world in the sense that they won’t need to violate any safety regulations to achieve their required level of protection.

Talk about maximizing preparation to meet opportunity in this never-ending competitive marketplace. Ceylon Graphite Corp is looking clean, and mean. 

Disclaimer: Ceylon Graphite Corp is an Edge Communications Client, and we own shares in the company.  

  • Edge Editorial Team

    At Edge Investments, we make investing in small cap stocks enjoyable and edge-ucational. We are here to teach you about investing, keep you up to date on news, and help connect you with companies that you may have a desire to invest in.

    View all posts

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