The Elements of Innovation Discovered
The Elements of Innovation Discovered
Metal Tech News - October 20, 2023
As the primary anode material, graphite accounts for an average of around 28% of all materials that go into lithium-ion batteries for electric vehicles and clean energy storage.
Graphite Creek material similar to the sample contained in this drill core has been transformed into active anode material, the single largest ingredient in the lithium batteries powering EVs.
Three months into its restrictions on exports of the critical computer chipmaking metals gallium and germanium, China announced that it will also be limiting global shipments of graphite, the largest single ingredient in lithium-ion batteries for electric vehicles.
On Oct. 20, China's Ministry of Commerce posted notices that the exports of nine types of high-purity and high-density artificial graphite, natural flake graphite, and related products will require state approval after Dec. 1.
The ministry cited a need to "safeguard national security interests" as the reason for the government lockdown on these graphite products needed for batteries that power EVs, store renewable energy, and go into countless numbers of cordless electronics and household products.
This is the same reasoning the ministry used to explain the restrictions for the exports of gallium and germanium that went into effect on Aug. 1.
At the time, many market and geopolitical analysts speculated that China's export restrictions of these two critical semiconductor metals as a counter to restrictions by the U.S. and other Western countries on the exports of chipmaking technologies and equipment to China.
"Gallium and germanium are chess pieces in a geopolitical game of enormous proportions," Christopher Ecclestone, a mining strategist at the consulting firm Hallgarten & Company, told Washington, DC-based Foreign Policy earlier this year.
The timing of the graphite export restrictions adds credence to the speculation.
The addition of graphite to the list of critical technology products being restricted for exports comes just days after the U.S. placed further limitations on the semiconductors that American companies can sell to Chinese firms.
In a July interview with China Daily, Wei Jianguo, former China vice-minister of commerce, warned that China "has more tools for countermeasures if Washington plans tougher technology restrictions on Beijing."
Given its importance to the global transition to e-mobility and renewable energy, along with China's dominant control over its supply, graphite is a big tool.
"Tit for tat – China says it might restrict graphite exports for use in EV batteries," said Neil Wilson, a chief market analyst for global brokerage firm Finalto. "It's Trade Wars 2.0 and it's inflationary,"
Over the past five decades, China has gained control over the supply of many of the minerals and metals critical to high-tech manufacturing, aerospace, defense, and other industrial sectors. Gallium, germanium, graphite, and rare earth elements are part of a much longer list of mined commodities that the world depends heavily upon China for its supply.
While the global markets for many of these raw materials are relatively small, they are vital ingredients in high-tech and green energy products. Over the years, China has been able to leverage its control over supply to bolster its manufacturing of high-tech goods and other products that require these mineral products.
At the same time, the country has gained a means of throwing a wrench into entire sectors of the economy by holding back exports.
In August, the Middle Kingdom demonstrated its willingness to use this leverage with the restrictions of exports on germanium and gallium that are used in microchips that go into smartphones, computers of all kinds, graphics processors, EVs, military hardware, and an uncountable number of other high-tech devices.
According to USGS data, China, which produced 98% of the world's gallium and was the leading global supplier of germanium during 2022, holds a dominant position when it comes to these critical chipmaking materials.
According to customs data, China did not export any wrought (metallic form) gallium and only one kilogram of wrought germanium in August and September. China's export data for germanium oxides are mixed zirconium dioxide, making it impossible to discern whether any germanium was included in the 2,734 tons of reported "germanium oxides and zirconium dioxide" exports over the previous two months.
While it is currently hard to say whether such tight restrictions will also be applied to graphite, which would have a much larger impact on Western economies, China sources warned back in July that the country would hit America with "trade restrictions where it hurts."
"If the hi-tech restrictions on China become tougher in the future, China's countermeasures will also escalate," Wei, who is now chairman of the state-backed China Centre for International Economic Exchanges, told China Daily.
Graphite, which accounts for an average of around 28% of all the materials that go into lithium-ion batteries, is a big wrench in China's countermeasures toolbox that could significantly slow the West's transition to low-carbon transportation and energy.
With more than 30 million EVs expected to hit global highways each year by 2030 and upwards of 45 million by 2045, the U.S. Department of Energy anticipates that the transition to e-mobility will require up to eight times more graphite than was mined globally during 2022.
The U.S., however, has no domestic graphite mines, leaving the nation heavily dependent on imports from China, which currently produces more than 60% of the world's mined graphite and nearly 90% of the advanced anode material for lithium batteries.
This is why DOE ranks graphite near the top of its list of minerals critical to America's energy future, and the U.S. Department of Defense is investing $37.5 million into Graphite One Inc.'s efforts to establish a domestic graphite materials supply chain that begins at the company's Graphite Creek project in Alaska.
Graphite Creek is "the largest known flake graphite resource in the USA and is among the largest in the world," according to the USGS, which makes it a prime candidate for helping to break America's reliance on imports of this critical battery material.
Large mining projects in the U.S., however, take several years to permit and then time to build.
China's graphite export restrictions, on the other hand, go into effect in six weeks.
"This bold and unexpected move by China in graphite has taken us by surprise, arriving far sooner than anyone could have predicted," said Kien Huynh, chief commercial officer at Alkemy Capital Investments, a United Kingdom-based company that specializes in the critical minerals and energy transition sectors.
"This turbocharges the urgency for the West to forge their independent supply chains, charting a course toward self-sufficiency in both the raw materials and the downstream components necessary to meet their own ambitious battery industry growth strategies," he added. "The race is on, and the stakes have never been higher."
With more than 16 years of covering mining, Shane is renowned for his insights and and in-depth analysis of mining, mineral exploration and technology metals.
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