China Implements Export Permit Requirement for Certain Graphite Products to Safeguard National SecurityIn a recent announcement on Friday, China revealed its intentions to mandate export permits for specific graphite products, citing national security concerns. This development marks China’s latest measure to restrict the shipment of crucial minerals, which play an indispensable role in the global energy transition.
Graphite, a relatively soft form of carbon, has gained prominence as a vital component in the production of batteries for electric vehicles (EVs). With China being the world’s leading graphite producer, responsible for a staggering two-thirds of the global supply, the move has significant implications for the burgeoning EV industry, according to data from the U.S. Geological Survey (USGS).
Understanding the Significance of Graphite in Electric Vehicles
Historically, graphite has predominantly found application in the steel industry. However, in recent years, a surge in demand from the electric vehicle sector has been witnessed. Data from the USGS underscores this trend, revealing a remarkable 250% increase in the use of graphite in the battery end-use market globally since 2018.
Graphite assumes a pivotal role in EVs, particularly in battery production. By weight, it is the most substantial component in EV batteries, with each vehicle typically incorporating 50-100 kilograms of this material into its battery pack, serving as the anode – the battery’s negative electrode. This quantity surpasses the amount of lithium used in an average EV battery by a considerable margin.
China’s Dominance in Graphite Production
China’s supremacy as the world’s foremost graphite producer is unmistakable, providing an astounding 67% of the global supply in its natural form, according to USGS statistics. While other countries like Mozambique, Madagascar, and Brazil are significant non-Chinese graphite producers, China maintains an even greater influence by refining over 90% of the world’s graphite into materials used in virtually all EV battery anodes.
Intriguingly, China’s largest graphite buyers include nations such as Japan, the United States, India, and South Korea, as indicated by data from Chinese customs.
Global Automakers Seek Alternative Graphite Suppliers
In response to these developments and potential supply chain disruptions, automakers, including industry giants like Tesla and Mercedes, have been actively pursuing alternative sources of graphite to reduce dependence on Chinese supply.
Rise of Synthetic Graphite and its Impact on the Market
In a bid to secure a stable graphite supply, both American and European companies have invested significantly in the development of synthetic graphite, a product that is expected to account for nearly two-thirds of the EV battery anode market by 2025, according to estimates from Benchmark Mineral Intelligence.
China, once again, plays a prominent role in this arena, dominating the production of synthetic graphite. Customs data for the first nine months of 2023 revealed a 45% increase in China’s exports of artificial graphite compared to the previous year, reaching 424,706 metric tons.
China’s Broader Restrictions on Mineral Exports
This announcement is part of a broader trend where China has been imposing export restrictions on critical minerals. In July, the country unveiled export restrictions on eight gallium and six germanium products, effective from August 1. These minerals have applications in high-tech microchips, and the restrictions stipulate that exporters must acquire an export license for dual-use items and technologies. According to customs data, these measures have significantly curtailed exports over the past two months.
China’s actions in the realm of mineral exports underscore the nation’s commitment to safeguarding its national interests, particularly in strategically important industries such as electric vehicles and high-tech microchips. These moves are expected to have significant implications for global supply chains, and the repercussions are closely monitored by governments, industries, and stakeholders around the world.
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