German-Canadian raw materials alliance: Graphano Energy, Volkswagen, Magna International

Graphite market expected to grow by 8.4% annually

President of the European Commission, Ursula von der Leyen, described Canada as a "perfect match" for the EU. She said that Canada was a resource-rich and reliable partner that shared Europe's geopolitical interests and sustainability goals. Many different critical elements are used in batteries for electric vehicles in particular. In addition to rare earths, batteries also contain lithium and graphite. Experts at Precedence Research expect the global graphite market to grow from USD 29.23 billion in 2024 to USD 65.6 billion by 2034. This corresponds to annual growth of 8.4%. Currently, China dominates the market with a global market share of just under 80%. Madagascar and Mozambique follow in second and third place. In Canada, the Lac des Îles mine is currently the only production facility.

Graphano Energy aims to secure Canada's graphite supply

In close proximity to Lac des Îles, which is operated by Northern Graphite, the up-and-coming company Graphano Energy is advancing the Lac Aux Bouleaux project. An agreement has even been reached with neighbor Northern Graphite to jointly use the on-site graphite processing plant. For Graphano Energy, this significantly reduces costs in the event of possible production. The regulatory framework in Québec, which offers significant tax incentives for exploration expenses, is also positive for Graphano Energy. High graphite grades over long distances directly below surface, as reported by the Company at Lac Aux Bouleaux, also promise success on the free market. This is all the more true given that graphite imports from China to the US are now subject to hefty tariffs of 163%. Even if these conditions gradually change, the premium for Chinese competitors is likely to remain significant.

Northeast of Lac Aux Bouleaux and also not far from a Northern Graphite project is Graphano's Standard Mine project. Here, too, high-grade graphite deposits immediately below surface are impressive. Metallurgical tests have shown that the material from both projects is likely to meet the requirements of the battery industry. Over the next few months, Graphano Energy plans to present a resource estimate, conduct further drilling on its projects, and prepare a feasibility study in 2026. An initial resource has already been provided. With battery production also set to begin in Europe in the coming years, Graphano Energy's timeline is well aligned.

Supplier Magna builds a bridge to Europe

Several battery factories are also being built in Canada itself, including a joint venture between Volkswagen and PowerCo in Ontario. Canadian automotive supplier Magna could play a central role in the cooperation between Canada and the EU on batteries. Magna supplies car manufacturers with comprehensive modules and components and provides complete manufacturing services. For electric vehicles, for example, Magna develops powertrains, battery housings, and driver assistance systems. Magna has traditionally had a strong presence in Europe and, through its Austrian subsidiary Magna Steyr, has already manufactured vehicles for BMW and Jaguar, among others, and most recently the all-electric Fisker Ocean. With such a broad base, Magna is likely to be one of the first points of contact when it comes to new automotive plants in Canada.

There is no alternative to investing in joint supply chains for batteries

Whether it is small caps like Graphano Energy or large industrial players such as Magna and Volkswagen, the new realities demand even closer cooperation between Canada and the EU. Although new projects within the EU have progressed slowly recently, and German automakers in particular are struggling against competition from China, it is clear that without significant investment, the battle against China is already lost. Companies like Graphano Energy have everything it takes to be at the forefront of new supply chains for the electric vehicle industry. Although the market capitalization of less than CAD 5 million highlights that the Company is in its early stages, the roadmap to production is already clearly outlined. Graphano Energy could be producing graphite as early as 2027. By then, there should be plenty of buyers.