China’s Export Controls on Graphite Spark Race for New EV Supplies
China’s recent move to impose export permits on certain graphite products has sent shockwaves through the industry. Miners worldwide now face a race against time to develop new projects in order to secure supplies for the next generation of electric vehicles (EVs).
New Export Controls to Protect National Security
China’s commerce ministry announced that it will require export permits for some graphite products to safeguard national security and protect its manufacturing dominance. As the world’s top graphite producer and exporter, China refines over 90% of the material used in EV battery anodes.
Risk of Over-Reliance on China
The upcoming generation of EVs is expected to hit the market around 2025. In light of the pandemic-related parts shortages experienced in recent years, car manufacturers are seeking to diversify their supply chains and reduce reliance on a single country.
Mining Projects Take Time
To secure future supplies of battery inputs, carmakers have started investing directly in mining projects. However, the process of building mines typically takes between five and ten years. This means that China will maintain its lead in supplying graphite for at least the next five years, as most of these projects are still in the pre-production stage.
China’s Message to the West
Hugues Jacquemin, CEO of Northern Graphite, believes that China’s export controls send a clear message to the West: “We are not going to help you make electric cars; you have to find your own way to do that.”
Urgency to Improve Domestic Supply
China’s unexpected move has prompted end-users to fear further restrictions. John DeMaio, President of Graphex’s graphene division, sees this as a catalyst to highlight the urgency of improving domestic graphite supply. Several graphite miners outside of China are likely to accelerate their plans to bring capacity online in the near term.
New Graphite Processing Facility in the US
Graphex Group plans to open a graphite processing facility in Warren, Michigan, by the end of 2024. The facility aims to supply US automakers with at least 10,000 metric tons per year of this crucial metal, the primary component in an EV battery.
China’s Dominance in Critical Minerals
In addition to graphite, China also dominates the production and consumption of other critical minerals such as cobalt, nickel, manganese, and rare earths. These minerals are essential for various industries, including electric vehicles, wind turbines, and consumer electronics.
Impact on Vehicle Prices and Supply Security
The cost of a vehicle heavily depends on the battery, and if carmakers outside of China are forced to use expensive materials or struggle to access them, it could lead to increased prices or reliance on Chinese battery manufacturers. This raises concerns about supply security for batteries and other electronic equipment.
The recent development has prompted mining companies and investors to explore opportunities outside of China, further boosting the development of graphite activities in countries like Greenland and Mozambique.
China’s export controls on graphite highlight the need for greater self-sufficiency in the EV industry. Car manufacturers and mining companies are now racing to secure alternative supply chains to ensure a steady and reliable source of battery materials for the future.