Analysis-China’s limitations on graphite will expedite plans regarding alternatives

By Nick Carey, Akash Sriram and Ernest Scheider

(Reuters) – The restrictions imposed by China on Friday to control the export of graphite, a crucial material for electric vehicle batteries, will hasten the development of alternative sources and materials, according to industry executives and analysts. However, this transition will take some time.

China, the largest producer and exporter of graphite globally, will now mandate export permits starting from December 1 for certain graphite products, including spheroidal graphite used by automakers. China refines over 90% of the world’s graphite into the material utilized in almost all EV battery anodes, which are the negatively charged components of the battery.

Industry officials have stated that China’s decision could escalate trade disputes on a global scale and inspire other countries to prioritize research into alternative sources and materials.

“We perceive China’s move as a potential catalyst to emphasize the urgency of improving (US) graphite supply,” stated John DeMeo, the president of Graphex Group’s graphene division.

Graphex is planning to inaugurate a graphite processing facility in Warren, Michigan by the end of 2024 to provide at least 10,000 metric tons of the lead metal annually to US automakers.

Grafex aims to function as a refiner in the West instead of a miner. DeMaio mentioned that the company has secured graphite supply deals with Syrah Resources and is exploring other sources.

Tesla, which did not respond to a comment request, has taken the lead in procuring graphite and signing agreements with Syrah and Magnis Energy Technologies.

New investments in the US and Europe are targeting China’s dominance in the graphite market by focusing on the development of synthetic graphite. However, industry experts have deemed this endeavor to be an uphill battle.

Benchmark Mineral Intelligence approximates that synthetic graphite could account for nearly two-thirds of the EV battery anode market by 2025.

Nonetheless, China’s battery materials giants such as BTR and Shanshan are also investing millions of dollars into producing more synthetic graphite.

Vianode, a synthetic graphite startup based in Oslo, will commence small-scale production in Norway next year. The company plans to expand to full-scale production in Europe and the US by 2030, producing enough material to supply approximately 2 million EVs.

Hans Eric Watney, the Chief Operating Officer, recently informed Reuters that the development of synthetic graphite production is costly but worth it to reduce dependency on China.

“Are we, as consumers, willing to pay more for sustainable materials in our batteries?” he asked in August. “That’s precisely what we should expect because we require a higher price due to the capital expense involved in constructing such a technologically advanced plant.”