The Elements of Innovation Discovered
The Elements of Innovation Discovered
Metal Tech News - February 9, 2024
Tesla has entered into an agreement to buy roughly 70% of the graphite anode material produced during the first phase of operations at Syrah Resources' Vidalia active anode materials plant in Louisiana.
Aerial view of Vidalia, the first graphite anode plant in the U.S.
Graphite accounts for an average of around 28% of all the materials that go into lithium-ion EV batteries.
A major milestone in breaking America's reliance on China for the minerals critical to the clean energy transition has been reached with the start of operations at Syrah Resources Ltd.'s Vidalia graphite anode materials plant in Louisiana.
Being the primary material used for anodes, graphite is the single largest ingredient that goes into the lithium-ion batteries powering electric vehicles and the ever-growing number of cordless electronic devices. It is estimated that a sedan-sized EV like the Tesla Model 3 needs about 100 pounds of graphite for its battery and large SUVs like the GMC Hummer require roughly 500 lb of this anode ingredient.
Until the start of production at Vidalia, however, China was the only country producing lithium battery anode material from natural graphite and accounted for 90% of the global anode material produced from both mined and synthetic graphite.
China flexed its dominance in both the mining and refining of graphite with the October announcement that nine types of high-purity graphite products require government approval to be exported out of the country.
Capable of producing 11,250 metric tons (nearly 25 million lb) of active anode material (AAM) per year during its initial phase of operations, Vidalia has begun to provide an Inflation Reduction Act-compliant alternative to China for EV battery anode material.
"Our 11.25ktpa (kilo-tonnes per annum) AAM Vidalia operation is strategic for both Syrah and the North American battery supply chain and is the foundation of our downstream growth strategy," said Syrah Resources Managing Director Shaun Verner. "This strategy is supported by strong EV-driven demand globally, recognition of the importance of independent natural graphite AAM critical mineral supply, and differentiation in terms of emissions intensity of production and provenance of supply."
Most of the initial production from Vidalia will go to Tesla Inc., which already has an agreement in place to buy 8,000 metric tons (17.6 million lb) of AAM from Vidalia per year, subject to the plant ramping up to adequate production and the anode materials produced there meeting the EV maker's qualifications.
Aerial view of Vidalia, the first graphite anode plant in the U.S.
Syrah plans to have the first stage of Vidalia ramped up to 80% of its 11,250-metric-ton-per-annum capacity within six months and up to 100% by mid-2025.
The Australia-based graphite mining and refining company is already working toward a major expansion that would quadruple the AAM output at Vidalia.
Syrah, which was previously rewarded more than $320 million in loan guarantees and grants from the U.S. Department of Energy, has applied for an additional $350 million under DOE's Advanced Technology Vehicles Manufacturing loan program to support the expansion of Vidalia to 45,000 metric tons (99 million lb) production capacity.
The anticipated rocketing in demand for graphite, along with China's current dominance in supplying this battery material, are two major factors behind DOE's previous and potential future investments in Vidalia.
"Right now, China absolutely dominates the graphite processing market," Department of Energy Deputy Secretary David Turk said during a Jan. 11 Senate Energy and Natural Resources Committee hearing on EV supply chains.
Sen. Lisa Murkowski, R-Alaska, however, is concerned about DOE investing so heavily in Vidalia, which will import its graphite from Syrah's Balama mine in Mozambique, while not putting any funding behind the Graphite Creek mine project in Alaska, which hosts one of the world's largest deposits of graphite.
She asserts that putting a "Made in America" stamp on Mozambique graphite due to it being processed in Louisiana comes at the expense of developing graphite mines on American soil.
The Made in America stamp, however, does qualify Vidalia AAM as a material that can be used in the batteries of EVs that are eligible for Inflation Reduction Act tax credits for consumers.
"The importance of Vidalia is reinforced by China's recent introduction of export controls on natural and synthetic graphite and its products, and US guidance on the definition of foreign entity of concern governing qualification for the Section 30D tax credit for new electric vehicles," said Verner.
Global analysts estimate that by 2030, it will take 5 to 6 million metric tons of graphite per year to fill lithium battery demands. This is nearly four times the 1.6 million metric tons mined globally during 2023, according to the U.S. Geological Survey.
Graphite accounts for an average of around 28% of all the materials that go into lithium-ion EV batteries.
In its highest demand projection, DOE forecasts that global graphite demand could be more than eight times current production by 2035.
"[G]lobal production capacity of graphite will still struggle to meet the high demand projections," DOE penned in its 2023 Critical Materials Assessment.
While graphite demand will likely not hit the top-end eightfold increase figure cited by DOE due to a diversification of anode materials and battery technologies, even a doubling of demand would require more than 3 billion lb of new graphite supply in just over a decade.
For perspective, this is 300 times the anode-producing capacity of the Vidalia expansion proposed by Syrah.
As a result, North American battery manufacturers and automakers will need all the Vidalia capacity, plus Graphite One Inc.'s proposed Graphite Creek mine in Alaska and associated graphite anode materials refinery, as well as Canadian projects such as the graphite anode material supply chain Nouveau Monde Graphite Inc. is developing in Ontario.
For now, the AAM being produced at Vidalia offers a small alternative to China for the largest ingredient in EV batteries while also bringing new clean energy jobs to Louisiana.
"Syrah looks forward to positively contributing to the communities around Vidalia and the company's stakeholders in the US for many years to come," Verner said.
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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