Transcription of Finance News Network Interview with Valence Industries Limited (ASX:VXL) CEO and Managing Director, Christopher Darby
Lelde Smits: Valence Industries Limited (ASX:VXL) produces high grade flake graphite products from its Uley Graphite facilities in regional South Australia. The group sells its products to Asia Pacific, European and North American customers.
I’m Lelde Smits and joining me today at ASX Investor Series in Perth is the company’s CEO and Managing Director, Christopher Darby. Christopher, welcome.
Christopher Darby: It’s great to be here, really appreciate the time and looking forward to the interview.
Lelde Smits: Valence Industries is Australia’s only graphite manufacturer. How long has the company been operating and what’s your manufacturing strategy?
Christopher Darby: We’ve been listed on the 6th of January 2014 where 18 months later, our manufacturing strategy is to get into production first, but also to value add continuously to the minerals we have.
Lelde Smits: At what rate is your Uley Graphite plant running and what are your plans for expansion?
Christopher Darby: The current operation has the capacity to produce 14,000 tonnes a year. We’re going through the final commissioning stages of that program now, and we’ll be ramping that production up throughout this year. We are then going to expand in significant phases in the next 18 months.
The first level will be to increase it by another 25,000 tonnes, so we start producing at 39,000 tonnes a year by the end of 2016 is the intention, maybe a little bit after. And then we’ll increase that again by another 25,000 tonnes in the 2017/2018 periods, to take us to a total production volume of 64,000 tonnes. But it’s a carefully staged and managed process for our production route, production increases.
Lelde Smits: With funding now in place for expansion, what’s next?
Christopher Darby: So that funding was a significant hurdle, particularly in this market. And the strategy now, is to make sure we put together all the detailed engineering construction packages, for that program of expansion. Get the existing operation up and running, have those revenues coming through the door to support what we’re doing, in terms of financing. And then draw down on that finance, as and when we’re ready to expand the operation.
Lelde Smits: Longer term, how do you expect the expansion will change Valence Industries?
Christopher Darby: We are moving from simply doing traditional graphite products, to doing advanced products. So this is a significant step forward, it hasn’t been done in this way before globally. And what we’re doing is taking our base traditional products, increasing their purity levels, but also creating more specialised products for our customers, because we sell to customers around the world. We have European, Asia Pacific, North American customers and we have them right across multiple industries, all the way from our factories and foundries, through to high-end electronics and batteries.
Lelde Smits: If we can look at an industry perspective now. Why do you believe that graphite is a compelling investment and, what is the current balance between supply and demand?
Christopher Darby: I think graphite is a compelling investment, if you understand advanced manufacturing. And you understand the ability in the industrial minerals space, to actually sell that product. So it’s compelling in the sense that you have multiple customers, that you are supporting with a graphite product. So therefore, by investing in a graphite company, you are doing a diversified play on day one if that client or rather the company, has multiple graphite customers and is also selling into multiple regions.
Lelde Smits: Final question, with expansion plans now in place. Where would you like to see Valence Industries this time next year?
Christopher Darby: I would like to see us with a very steady state production, from our existing operations. And with significant advances in the construction program, getting towards turning on the new plant, at the same time this year. And we have every expectation we can do that. That’ll be a vigorous and aggressive goal, but that’s what we would like to see happening next year.
Lelde Smits: Christopher Darby, thank you for the update from Valance Industries.
Christopher Darby: Thank you very much for your time.