Focus Graphite's Strategy “Build it and they will come” is not the strategy Focus Graphite is following. Focus has far greater ambitions than simply getting a mine to production and selling a few thousand tonnes of Graphite per year.
Her ambitions appear to be almost insatiable and in stark contrast to its junior industry peers and indeed the junior environment in general. Business unusual is though built upon solid ground imo.
The current strategy of Focus Graphite is built upon 3 key themes:
Cost Leadership
Vertical Integration
Lateral Expansion
The first is a central tenant of Michael Porter’s generic business strategy, that may be adopted in order to gain a competitive industry advantage. In the case of Focus, the objective is to become the lowest-cost producer in the Graphite industry. If the achieved selling price can at least equal (or be near) the average for the market, then the lowest-cost producer will enjoy the best profits, longevity in the market and the greatest return for investors. Focus intends to achieve this through the high ore grade / low production cost potential of the Lac Knife deposit, in contrast to other producers.
The cost leadership advantage leads to the 2nd major theme in the strategy of Focus Metals. This is the ‘mine to market’ strategy, or the strategy of vertical integration. As we see new entrants to the Graphite space there is an increasing risk of the business becoming more and more commoditised. The strategy of Focus is to develop a company that conducts activities and earns revenues at various points moving up the value chain, from 95% Graphite, to enriched Graphite, to spherical Graphite, to battery anodes and indeed beyond. At all times Focus will seek leverage from the first key theme of its strategy, that of cost leadership.
As part of this strategy Focus is developing key relationships with organisations who are considered to be the very best in their field, for example Hydro-Quebec. This strategy is best illustrated by multinational oil companies with control of up and down-stream operations. Another example on a much larger scale is that of China, who increasingly is not content to be the low-cost, low-value-added capital of the world.
Focus’ strategy of vertical integration also seeks to look beyond the current marketplace. If anode production is the current pinnacle in the value chain, Focus is looking further into the future with its interests in Graphene and Graphene IP, through Grafoid Inc. If you consider that Graphene will make a massive impact in the fields of next generation energy storage and advanced materials, Focus is attempting to put in place now the groundwork to be one of the leaders in the coming revolution. Grafoid again seeks to create highly credible relationships with best of breed organisations such a Rutgers University, to be at the forefront of development of advanced materials, such as conductive polymers and replacements for current manufacturing materials. My opinion is that we may also see a deepening of the relationship with Hydro-Quebec in the field of Graphene use in battery technology at some time in the future.
Finally, we come to the final strategic theme, that of lateral expansion. Focus Graphite has expressed the intention of becoming a world leader in the Graphite space and this will in part be achieved by the acquisition of similar deposits, moving into new markets, achieving economies of scale through industry consolidation. This is evidences through the intention to participate in the Canindé graphite in Brazil.
This strategy will certainly take time to implement and is also subject to the challenges of complexity risk. It is infinitely easier to just bring a mine to market, but Focus is applying best practice as it seeks to minimise this risk through collaboration. We are building trusted relationships and seeking to effectively share the governance of problems with organisations of great experience and knowledge to achieve our goals.
This approach I feel is testament to the quality of management we have at Focus Graphite Inc. Hopefully the market will catch on soon.
IMO, DYOR.