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Graphite rarely makes headlines, yet it sits inside nearly every lithium-ion battery as the main material in the anode, the part of the cell that holds lithium when the battery is charged. China refines about 90% of the world’s graphite. That concentration is why a financing closed on today by a battery materials company based in Abu Dhabi deserves a closer look.
The company is Falcon Energy Materials plc (OTCQB: FLCNF, TSXV: FLCN). It raised $24.3 million (CAD$34.24 million) by selling 34.24 million units at $0.71 (CAD$1.00) each. Every unit includes one share plus half a warrant. Each full warrant lets the holder buy another share at $0.92 (CAD$1.29) over the next 24 months. Falcon first set out to raise $21.3 million (CAD$30 million) and enlarged the deal after strong demand.
Falcon’s plan is to turn natural graphite concentrate into coated spheronized purified graphite, known as CSPG, the refined and rounded form that battery makers use in anodes. Its flagship project is a plant in Morocco designed to produce 25,000 tonnes a year, and a pilot plant there opened in July. The company works with Moroccan partners and Chinese technology firms. Those include Hensen, its technical partner, and Shanghai Shanshan New Material Co., Ltd., which signed a term sheet in 2025 to help Falcon find customers.
The unusual part is where much of the money is going. Falcon plans to use it toward a potential minority stake in an established anode material producer in China, based on a term sheet signed on August 6th. The company has not named the producer and says a final deal is not guaranteed. Remaining funds will support the Morocco project, growth elsewhere and day-to-day costs. Management contends that owning part of an operating producer would lower the risk of building its own plant.
The deal closed the same week Chinese President Xi Jinping arrived in Washington for talks with President Donald Trump, with critical minerals expected to be among the toughest topics. Analysts say Beijing has kept approvals for rare earth export licenses slow and selective, and its pause on broader controls runs only until November 10th. Graphite itself has faced Chinese export controls since late 2023.
So is Falcon’s China connection a strength or a liability? The case for strength is practical. Chinese companies have years of experience making anode material at scale, and a stake in one could bring know-how, customers and revenue sooner than a new plant could alone. A Moroccan plant also offers Western buyers supply that is not refined inside China. The case for caution is political. Washington increasingly views dependence on Chinese supply chains as a lasting strategic weakness. Buyers subject to rules on foreign ownership or content may examine any Chinese equity or technology ties closely. How Falcon separates, or links, the Morocco plant and its Chinese investment could matter as much as the product itself.
AOF Trading LLC, a Cayman Islands investment company with its head office in New York, bought 15 million units for $10.7 million (CAD 15 million). Once 3.35 million of those units clear escrow, pending an exchange review of its filings, AOF will hold about 11.37% of Falcon’s shares. La Mancha Investments, an existing insider, also participated.
The most important agreement is the one not yet signed. Until Falcon names its Chinese partner and discloses terms, investors are weighing a strategy rather than a transaction. Whether Western buyers reward a supply chain built with Chinese expertise or steer away from it will likely be settled in Washington as much as in Morocco.
