CHINA - Global Graphite Supply Threatened

Arno Froese

A rise in demand for electric cars is boosting demand for graphite, a key battery component. As battery and car makers try to secure supplies, China’s domination of the graphite market has become a problem.

China dominates the global graphite market, producing almost all of the graphite that’s used for anode, the negative end of a lithium-ion battery.

“We hardly have any supply in Europe to even scratch the surface of future graphite demand for the lithium-ion battery industry so far,” Burkhard Straube, the head of the graphite solutions unit at SGL Carbon, told DW.

“Without the further development of a European battery value chain including raw materials and components I would be highly concerned how companies in Europe as well as in North America would satisfy the demand for instance for graphite in the future,” he told DW.

The world could witness a deficit of 85,000 tons of the mineral this year alone with electric vehicle sales expected to touch 10 million units, Benchmark Mineral Intelligence analyst George Miller told DW.

“Graphite is often a very underrepresented critical mineral in the lithium-ion battery,” Miller said. “Especially, not enough attention is paid to the potential for supply deficit and to the potential for the graphite market itself to become structurally affected by demand from electric vehicles.”

Battery makers currently use a mixture of both natural and synthetic graphite in different ratios in their anodes. They, however, favor synthetic graphite because it’s more consistent, has extremely low levels of impurities, its specifications can be easily controlled since it is manufactured and offers better performance.

But producing synthetic graphite is costlier and a more energy-intensive process, requiring temperatures as high as 3,000 degrees Celsius (5,432 degrees Fahrenheit). Manufacturing synthetic graphite in China is even worse given that most of the electricity there is generated from highly polluting coal.

The graphite supply squeeze is already prompting European and US battery and EV-makers to speed up their efforts to source more graphite from outside of China as they look to cut their reliance on the Asian country and shorten their supply chain.

Tesla—which in December bemoaned US tariffs on Chinese graphite and asked the government to waive them, saying there was just not enough of the mineral elsewhere—signed a supply agreement with Australia’s Syrah Resources for graphite anode material from a production plant that it is setting up in Louisiana., 14 March 2022

Arno's Commentary

Here we have one more link in the chain of interdependence of the nations of the world.

In this case, it’s China, the dominant producer of graphite globally: something urgently needed in the ever-growing high-tech industry worldwide. 

Searching the Internet for the term “economic interdependence,” explains:

As a nation develops it will either advance further to create the goods it needs within its own borders, or it will continue to seek goods and raw materials from other nations. As a nation advances it also transitions from a manufacturing-based economy to a service-based economy; therefore, it needs to rely on other nations for manufactured goods. This is the case with the United States and its reliance on other nations for manufactured goods such as electronics, clothing, and, in some cases, food. 

In other words, true independence does not exist in reality. The most independent nations in the world are generally the poorest ones. Developed, industrialized, and high-tech nations need each other more than ever before.

At the time of writing, Russia’s invasion of Ukraine continues. Thus, new power blocs are being formed. Yet in the end, they all will be forced to come an agreement through dialogue and compromise.

As previously noted in various articles, China needs the United States as much as the US needs China. The very obvious difference is America’s high-tech industry; but on the other hand, China’s manufacturing capability has stuffed its coffers to the brim with foreign currency. Welcome to the new world.

Arno Froese is the executive director of Midnight Call Ministries and editor-in-chief of the acclaimed prophetic magazines Midnight Call and News From Israel. He has authored a number of well-received books, and has sponsored many prophecy conferences in the U.S., Canada, and Israel. His extensive travels have contributed to his keen insight into Bible prophecy, as he sees it from an international perspective.

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