SINGAPORE, October 20 – China has announced new export regulations for certain graphite products, citing national security concerns, in the latest move aimed at controlling the global mineral supply chain, particularly those vital for the energy transition. Graphite, a versatile form of carbon, plays a pivotal role in the production of electric vehicle (EV) batteries, and with China being the world’s largest producer, accounting for a substantial portion of the global supply, this development raises significant implications for the EV industry.
Graphite’s Crucial Role in Electric Vehicles
Traditionally, graphite was primarily associated with the steel industry, but the rapid growth of the EV sector has significantly boosted its demand. According to the U.S. Geological Survey (USGS), the graphite market for EV batteries has surged by 250% worldwide since 2018. Graphite holds the distinction of being the largest component by weight in EV batteries, with an average electric vehicle using between 50 to 100 kg of graphite in its battery pack to support the anodes, which are the negative electrodes of the battery. This quantity surpasses the amount of lithium present in an EV battery.
China’s Dominance in Graphite Production
China stands out as the world’s leading graphite producer, contributing 67% of the global supply of naturally occurring graphite, as reported by the USGS. While countries such as Mozambique, Madagascar, and Brazil are significant non-Chinese graphite producers, China further refines over 90% of the world’s graphite into a material suitable for use in virtually all EV battery anodes. Key importers of Chinese graphite include countries like Japan, the United States, India, and South Korea, based on data from Chinese customs.
Major automakers like Tesla and Mercedes have been actively seeking alternative graphite sources outside of China to diversify their supply chains and reduce reliance on a single source.
Rise of Synthetic Graphite
Companies in the United States and Europe have been investing in the development of synthetic graphite, which is projected to make up a substantial share of the EV battery anode market by 2025, according to estimates from Benchmark Mineral Intelligence. China also plays a prominent role in synthetic graphite production. Customs data reveals that China’s exports of artificial graphite in the first nine months of 2023 saw a significant increase of 45% compared to the previous year, totaling 424,706 metric tons.
Other Mineral Export Restrictions
This move to control graphite exports follows a similar pattern of action taken by China earlier this year when it introduced export restrictions on eight gallium and six germanium products starting in August. These minerals are crucial components in high-tech microchips, and the export restrictions have effectively curtailed exports over the past two months, as per customs data.
China’s tightening grip on the supply of critical minerals raises concerns in the international community about the potential impact on various industries, particularly those dependent on these minerals for technological advancements, such as EVs. It highlights the growing importance of diversifying supply chains and developing alternative sources for these critical minerals to maintain a stable and secure global mineral supply.