China has announced new export restrictions on graphite, a vital mineral for the production of electric vehicle (EV) batteries, in a move that could disrupt global supply chains and boost prices. The commerce ministry said on Friday that some graphite products would require export permits to protect national security, without specifying which ones or how many.
China is the world’s largest producer and exporter of graphite, accounting for more than 70% of global output and 60% of global exports, according to the US Geological Survey.
It also dominates the refining of graphite into spherical graphite, a high-purity form used in EV battery anodes. China produces more than 90% of the world’s spherical graphite, while the rest of the world relies on imports from China or raw materials from other countries.
The new export curbs come as demand for EVs is surging, driven by government policies, consumer preferences and technological innovations. EVs are expected to account for more than 50% of new car sales by 2030, according to BloombergNEF.
Graphite is one of the key battery minerals, along with lithium, cobalt, nickel and manganese, that are essential for the transition to a low-carbon economy. However, the supply of these minerals is concentrated in a few countries, posing risks of shortages, price volatility and environmental and social impacts.
China has been tightening its control over its mineral resources in recent years, as it seeks to secure its manufacturing dominance and strategic advantage. It has also imposed tariffs, quotas and bans on some exports of rare earths, another group of critical minerals used in various high-tech products.
The new graphite export restrictions could have significant implications for the global EV industry, which is already facing challenges from the COVID-19 pandemic, chip shortages and rising raw material costs. Several automakers, such as Tesla, Volkswagen and Ford, have been investing directly in mining projects or forming partnerships with suppliers to ensure future access to battery minerals.
However, developing new mines and processing facilities takes time and money, and faces regulatory and environmental hurdles. It could take at least five to 10 years for new graphite projects outside China to reach production, according to industry experts.
Meanwhile, China could use its graphite leverage to gain more market share in the EV battery sector, or to pressure other countries on trade or geopolitical issues.
Some analysts have suggested that China’s move could also spur more innovation and diversification in the battery technology, such as using synthetic graphite or other alternatives to reduce dependence on natural graphite.
Source: Mining Weekly
