Valence Industries is one of - if not the - best positioned of the emerging graphite stocks

John Robertson

PortfolioDirect

Valence Industries is one of - if not the - best positioned of the emerging graphite stocks. Access to the existing supply chain is critical to this judgment. Two factors stand out for Valence: the experience of the people involved and being able to begin production imminently because of its production base at historical facilities in South Australia. Later, when others come on stream, the industry faces a danger similar to the one confronting iron ore producers. Chinese miners populate the upper end of the industry cost curve while a plethora of new suppliers will be able to meet all demand with substantially lower costs. Some of the most bullish commentaries suggest that, uniquely among commodity producers, those mining graphite will be able to sustain currently high margins. Considerations like product specification and supply reliability will play a role in who gets to sell their product but competition for a position in the supply chain will push the future risks in one direction.


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John Robertson
John Robertson
PortfolioDirect

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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