Fortune Graphite

The commercial market for graphite is global and diverse. Graphite is a growth market today and is projected to be the
quintessential growth market of the near future. The increasing demand for graphite comes from a myriad of industrial
sectors and spans both the developing and advanced economies.

The increasing demand is related in part to the proliferation of carbon-based applications underlying today's advanced
standard of living from the exploration of outer space to safer computers.

Updating and modernization of the steel and iron industries in North America and the developing economies of the Asia
Pacific Basin will consume large volumes of graphite. The iron and steel industries are presently the largest volume users of
graphite.

It derives in part from the increased usage in established technologies such as transportation since graphite has replaced
asbestos in brake linings and pads. New automotive production continues to increase and more replacement parts are
required for the growing number of vehicles, therefore indicating that the volume of graphite consumed will increase.

Present opportunities within North America arise in part from the fact that the US has no natural amorphous graphite
production. It has to import all of its high-quality graphite. Most of Mexico's graphite is of the amorphous designation.

In the past the US has imported large amounts of graphite from China, but there have been issues relating to the quality of its
graphite. There are also human rights issues, which have become a concern with US consumers. As well the Chinese
market is increasingly using its own supply of graphite. This would dramatically decrease the volume of graphite on the
open market, as the PRC is currently the major producer and exporter of graphite.

Market Size
The world market for all grades of graphite is presently approximately 600,000 tons per year. Most of this, in terms of
volume, is utilized by the developing nations and the industrialized world in the iron and steel industries.

Market Trends
As China continues to grow its own industrial base, less of its amorphous graphite will be available for export. This will
cause the supply-demand balance to swing in favour of suppliers (The US Geological Survey states that in 2001 the
supply-demand equation was in perfect balance), and increase prices.