Next US-China trade clash: graphite

In December, China implemented new export controls on graphite, further compounding trade tensions with the United States and other Western nations. This decision reinforces concerns over the fragility of the West's over-reliance on import monopolies and serves to intensify the ongoing search for alternative sources that would otherwise have been considered economically unattractive.

Outside of its use in electric vehicle batteries, an application that is rocketing its demand, this carbon-based mineral is heavily used in the aerospace, electronics, chemical and steel industries, with graphene nano-lattices being an especially useful application in a growing array of material sciences.

China started early developing a solid hold on the worldwide supply chain of key battery minerals and manufacturing processes. In addition to producing nearly 90% of the world's refined graphite, the country accounts for 73% of global refined cobalt and roughly half of the world's nickel, copper and lithium.

As a result, China's production accounts for 70% of cathodes, 85% of anodes, 66% of separators, and 62% of electrolytes for global markets, according to the US Department of Energy.

Tech and trade clash

The contentious U.S.-China trade relationship has intensified over the last two presidencies, with Biden maintaining tariffs on Chinese goods and introducing further trade restrictions in an effort to develop independence from China's monumental trade influence over global energy transition materials and products.

China, which already dominates the world's graphite industry, has now banned exports of natural and synthetic graphite materials without first receiving government authorization.

Alongside the new U.S. tax credit incentivizing domestic mineral use, China's tightening export controls have further prompted the U.S. auto industry's investment in locally sourced graphite.

Rewarding recycling

Graphite can be found in nature as crystalline flakes or masses, which are processed into tiny spheres for anode manufacturing. Graphite can also be synthetically produced by heating coal or petroleum byproducts to roughly 4,500 degrees Fahrenheit, an energy- and emissions-intensive process.

Recyclers worldwide have yet to efficiently recover battery-grade graphite at scale. With the mineral being relatively cheap to mine and manufacture, the industry has been slow to take interest, focusing on the reuse of expensive cathode metals with conventional processes.

Graphite, which can comprise up to 30% of an EV battery's weight, is treated as a byproduct, often being burned for energy or sent to landfills.

Investors are seeking companies that support sustainability and strategic autonomy, not only to contribute to resource security but also to align with international net-zero policies.

Additionally, the U.S. Department of Energy's battery recycling initiatives are aimed at funding research and developing demonstration plants.

More solutions needed

For graphite recycling, the challenge has been to obtain a high-performance, battery-grade product. Traditional approaches of pyrometallurgy (furnace smelting) and hydrometallurgy (water and chemical separation) are inefficient – either burning off the graphite or requiring additional energy-intensive processes to restore the extracted graphite's structural integrity, driving up costs.

As long as it's cheaper to get out of the ground, recycling graphite will remain an afterthought. Researchers are constantly seeking new and efficient ways to recycle, such as the emerging branch of solvometallurgy, testing separation of various elements via solutions of organic compounds like oxalate derived from plants.

Additionally, biometallurgy (microorganisms), green hydrometallurgy (less water, alternative chemicals), and electrometallurgy (electricity) are being explored as the next generation of techniques in the battery recycling industry to reclaim as much material as possible without waste and pollution.

U.S. facilities

American Battery Technology has developed an integrated battery recycling system based on programmable robotic de-manufacturing. The company plans to scale up to recycling several tons of graphite-rich material a day with the help of a roughly $10 million Department of Energy grant funded through the 2021 bipartisan infrastructure law.

Industry leaders Li-Cycle Holdings, Redwood Materials and Ascend Elements are pioneers in North American recycling and closed-loop battery production, working to develop the infrastructure to sustainably reclaim materials from spent batteries, including graphite.

In October, Ascend Elements and Koura Global announced plans to build the first "advanced graphite recycling facility" in the U.S.

"We're rethinking the way we use the planet's resources and reaching higher to recover the maximum value in used lithium-ion batteries," said Mike O'Kronley, CEO of Ascend Elements. "Graphite recycling is nothing new, but traditional graphite recycling methods do not produce a battery-grade product. The graphite recovered in most battery recycling processes is typically of a lower purity and must be used in non-battery applications. Our Hydro-to-Anode process can produce 99.9% pure graphite, which even exceeds battery-grade requirements. It's a game changer for the industry."

In 2023, Graphite One was awarded $37.5 million by the U.S. Department of Defense to accelerate the development of a domestic graphite anode material supply chain that includes a recycling plant in Washington state.

"With this new proposed recycling division joining our Graphite Creek mine and advanced graphite materials manufacturing plant as the third link, Graphite One plans to bring the full circular economy to the U.S. graphite supply chain," said Anthony Huston, president and CEO of Graphite One. "When you're in the renewable energy space, you've got to think through the whole lifecycle – where will EV and lithium-ion batteries go when they are no longer useful? It can't be to the landfill. That's not responsible. Battery materials are simply too critical and too scarce to let them go to waste."

The Graphite Creek deposit in Alaska, which anchors Graphite One's planned U.S. supply chain, has been cited as the largest known graphite deposit in America by the U.S. Geological Survey.

"With this new partnership, Graphite One would be the only fully integrated domestic supply chain for graphite to accommodate the different requirements of battery companies," said Huston.

Encouraging side-effects

Domestic graphite can help EVs qualify for the "clean vehicle" tax credit, meeting critical mineral sourcing requirements from the 2022 Inflation Reduction Act. To qualify, EV makers must obtain a large fraction of their battery minerals from recycled and domestic supplies or free-trade partnerships.

"We need to get recycled graphite to a level where companies can provide material samples to battery companies to evaluate the material," said Brian Cunningham, batteries research and development program manager at the DOE's Vehicle Technologies Office. "Once the recycled graphite enters the evaluation process, we should start to see an uptick in companies setting up pilot- and commercial-scale equipment."

The viability of graphite recycling will still depend on the overall price tag. Despite China's export controls, graphite may remain relatively cheap, which will buy the U.S. time to build a recycling industry and infrastructure that supports net-zero goals.

Tight trade restrictions not only risk the acceleration of alternative resource development by formerly dependent countries but can stimulate reactive policy and investment in support of new technologies – speeding development and strengthening their economic viability.

However, as the geopolitical narrative unfolds, the need for robust, secure supply chains coupled with battery recycling and domestic processing will naturally lean the U.S. toward a circular economy.