The Elements of Innovation Discovered
The Elements of Innovation Discovered
Critical Minerals Alliances 2024 - September 16, 2024
Lucid Motors has struck a deal with Graphite One to purchase anode material for the batteries going into its award-winning Air and upcoming seven-passenger Gravity electric vehicles.
Graphite accounts for approximately 28% of all the materials that go into lithium-ion batteries for EVs.
Core from drilling through a high-grade lens at the Graphite Creek project in Alaska, home to the largest known deposit of graphite in the United States.
The former critical minerals stockpile site where the Graphite One processing and recycling plant has ready access to roads, rail, barges, affordable energy, and America's emerging EV sector.
Tesla has entered into an agreement to buy roughly 70% of the graphite anode material produced during the first phase of operations at Syrah's Vidalia plant in Louisiana.
While graphite has not captured the same level of media attention as some of the other mined materials critical to the clean energy transition, the strategic nature of this largest ingredient in lithium-ion batteries powering electric vehicles is high on the list of concerns for American automakers, Washington policymakers, and the Pentagon's top brass.
These worries are based on a trifecta of graphite disadvantages for the United States – global demand for this battery and industrial material is expected to triple by 2030, this critical and strategic material is not currently mined in the U.S., and China dominates global graphite mining and refining.
Adding to the anxiety over whether America will be able to source adequate supplies of graphite for its burgeoning EV sector, China emplaced state-controlled restrictions on exports of nine types of high-purity and high-density artificial graphite, natural flake graphite, and related products.
"This bold and unexpected move by China in graphite has taken us by surprise, arriving far sooner than anyone could have predicted," Kien Huynh, chief commercial officer at Alkemy Capital Investments, a United Kingdom-based company that specializes in the critical minerals and energy transition sectors, said of the export controls that went into effect late in 2023.
"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."
To get into this race, the U.S. government is implementing an all-of-government strategy that includes the Department of Defense investing in accelerating domestic graphite mining, the Department of Energy backing domestic graphite processing, and the White House helping to level the playing field by placing heavy tariffs on the imports of graphite from China.
While graphite has long been an industrial material tied closely to the steel industry, the rise of this carbon material to critical status is tied to its importance to the lithium-ion batteries powering EVs and storing renewable energy.
This criticality is due to graphite being the primary material used in the anodes of lithium-ion battery cells, making up about 28% of all the minerals and metals going into these batteries. As a result, the battery pack of the average-sized passenger EV requires roughly 115 pounds of graphite, while full-size electric pickups and SUVs need 500 lb of graphite for their batteries.
Graphite accounts for approximately 28% of all the materials that go into lithium-ion batteries for EVs.
Even though consumer enthusiasm for EVs has cooled somewhat, analysts continue to forecast that global graphite demand will reach 5 to 6 million metric tons per year by 2030. This is more than three times the 1.6 million metric tons mined globally during 2023.
What makes this situation even more precarious for American automakers transitioning to EVs and the U.S. military's increased reliance on battery-powered technologies is that, as of 2023, China accounts for 77% of all mined graphite and more than 90% of the world's graphite anode material production.
Due to China's near-complete dominance of global mining and refining of graphite, the International Energy Agency (IEA) believes this largest lithium-ion battery ingredient poses extraordinarily high geopolitical and supply risks to the global energy transition.
IEA, however, does not foresee global battery-grade graphite supply chains making a sudden shift away from China. In its Global Critical Mineral Outlook 2024 report, the energy agency forecasts that the communist nation will account for more than 95% of the growth of this critical material between now and the end of the decade.
Based on projects currently in the development pipeline, supplies of battery-grade graphite available outside of China are projected to only meet about 10% of global demand by 2030.
This means that the communist nation will continue to control the global graphite supply, and the state-controlled graphite export restrictions put in place at the end of 2023 provide a spigot.
In addition to shutting down graphite supply outside of China, the nation can open the spigot to flood the markets and drive down prices. This tactic, which China has previously used to maintain control of rare earth markets, could be used to impact the economics of projects endeavoring to scale up alternative graphite sources in the West.
To help level the playing field for companies developing graphite mines and refineries in the U.S., President Biden introduced 25% tariffs on natural graphite imported from China starting in 2026.
"Concentration of critical minerals mining and refining capacity in China leaves our supply chains vulnerable and our national security and clean energy goals at risk," the White House penned in a May 14 briefing on broad package of tariffs aimed at countering China's unfair trade practices.
America's dependence on China for graphite is not due to the lack of quality domestic deposits. Instead, it has more to do with the economics of globalization – domestic mines and refineries cannot compete financially with materials produced in countries with lower environmental and labor standards.
This left the door open for China and its longer-term strategy to control the markets for graphite and other critical minerals, along with the manufacturing of products made from these mined materials.
In mid-2023, the U.S. Department of Defense stepped in to help break America's heavy dependence on Chinese graphite by providing a $37.5 million grant to help fund a feasibility study that is accelerating Graphite One Inc.'s plans to develop an all-American mine-to-EVs graphite supply chain.
Core from drilling through a high-grade lens at the Graphite Creek project in Alaska, home to the largest known deposit of graphite in the United States.
The Pentagon's decision to help accelerate the completion of an engineering and economic study for Graphite One's planned supply chains follows a 2022 presidential determination by Biden that designated graphite as a Defense Production Act Title III material "essential to the national defense."
"This Department of Defense grant underscores confidence in our strategy to build a 100% U.S.-based advanced graphite supply chain – from mining to refining to recycling," said Graphite One President and CEO Anthony Huston.
This supply chain will be anchored by Graphite Creek, a project in western Alaska that hosts the largest known graphite deposit in the U.S. and one of the largest in the world, according to the U.S. Geological Survey.
The graphite mined in Alaska will be upgraded to battery-grade anode material and other materials at a processing plant to be built at a former national defense critical minerals storage stockpile site in Ohio.
A large and previously industrialized property with ready access to roads, rail, barging facilities, and plentiful electricity, the old national defense stockpile site checks off all the boxes for Graphite One.
"Ohio is the perfect home for the second link in our strategy to build a 100% U.S.-based advanced graphite supply chain – from mining to refining to recycling," said Huston.
While Graphite One is advancing its Ohio plant and Alaska mine in parallel, it is expected that the processing facility will be finished ahead of the mining operation.
This timing, however, is advantageous.
While waiting for natural graphite from its planned mine in Alaska, which will take longer to permit and build, the Ohio plant will produce synthetic graphite anode material for lithium batteries. This will allow Graphite One to begin offering a domestic supply of this critical battery material while the mine is being developed, and the synthetic graphite can be used to augment and enhance the natural graphite delivered from Alaska.
"With the U.S. currently not producing any natural and synthetic anode materials, Graphite One has formulated a fast-track path-to-production strategy jump-starting our battery anode material production," Huston explained.
Graphite One's strategy to build the Ohio processing plant before graphite from its Alaska mine is available received a major boost with a July agreement to supply California-based EV manufacturer Lucid Motors with battery-grade graphite anode material as soon as the Ohio plant comes online.
"We are committed to accelerating the transition to sustainable vehicles and the development of a robust domestic supply chain ensures the United States, and Lucid, will maintain technology leadership in this global race," said Lucid Motors CEO and Chief Technical Officer Peter Rawlinson. "Through work with partners like Graphite One, we will have access to American-sourced critical raw materials, helping power our award-winning vehicles made with pride in Arizona."
The supply agreement with Lucid, which manufactures its award-winning luxury EVs at a factory in Arizona, provides a key link to extending Graphite One's envisioned supply chain to EVs and the American consumers that drive them.
"This is a historic moment for Graphite One, Lucid and North America: the first synthetic graphite supply agreement between a U.S. graphite developer and U.S. EV company," said Huston.
Policymakers across the emerging supply chain hail the graphite supply agreement as a win for their constituents and the nation.
"By combining the resources from the new Ohio facility with the natural graphite mined in Alaska for Lucid's cars manufactured in Arizona, we are showcasing the importance of developing critical mineral supply on American soil," said Ohio Rep. Dave Joyce.
"The partnership between Lucid Motors and Graphite One will strengthen our economy, bolster our domestic supply chain of critical minerals, and reduce our reliance on foreign entities for the materials needed to build electric vehicles," added Juan Ciscomani, an Arizona congressman whose district is home to Lucid Motors' AMP-1 EV factory.
The former critical minerals stockpile site where the Graphite One processing and recycling plant has ready access to roads, rail, barges, affordable energy, and America's emerging EV sector.
During its initial phase, the Ohio plant will have the capacity to produce 25,000 metric tons of synthetic anode material per year, which will then be scaled up to 100,000 metric tons to meet demand and process graphite from the Alaska mine.
Lucid has agreed to buy up to 5,000 metric tons of advanced anode material per year from Graphite One for the first five years after the Ohio plant begins producing synthetic graphite, which is expected in 2026.
"I'm pleased that Graphite One and Lucid Motors are partnering to create a domestic supply chain for electric vehicles made in America from materials mined in Alaska," said Sen. Lisa Murkowski. "These companies represent the start and the end of the supply chain, and they have the right vision to help strengthen our economy, our competitiveness, our security, and our commitment to true sustainability."
Graphite One hopes to get the Graphite Creek mine at the front end of the supply chain through the permitting and development in time to begin feeding American-mined graphite to the Ohio plant around the end of the decade, which aligns with expected growth in demand for this critical lithium-ion battery material.
A feasibility study that outlines the engineering and economic parameters of the Graphite One supply chain is expected by the end of the year.
The Pentagon's investments into alternatives to China for mined graphite also extend into Canada.
In 2020, the U.S. and Canada unveiled a joint action plan to strengthen North American production of minerals critical to defense, aerospace, clean energy, communication, and other key industries.
Under this collaboration to expand critical minerals production, DOD and Natural Resources Canada (NRCan) are investing a combined $12 million to support Lomiko Metals Inc.'s endeavors to advance toward developing a mine at its La Loutre project in Quebec.
Lomiko Metals CEO Belinda Labatte said the bilateral funding in support of feasibility studies for La Loutre is a major milestone for the company and North American graphite supply chains.
"It is a win for Quebec, Canada, and the United States as we approach this next phase of studies with an exceptional opportunity with the DOD and the Canadian government to build a collaborative, inclusive approach to responsible energy transition and supply chain resilience in North America," she said.
According to a 2023 calculation, the deposit outlined so far at La Loutre hosts 3.6 million metric tons of graphite.
The $6.4 million of DPA Title III funding from DOD and the $3.6 million NRCan investment will support a three-phase strategy to advance La Loutre graphite to a definitive feasibility study.
"Canada is positioning itself as a global leader in the supply of responsibly sourced critical minerals for the green and digital economy," said Canada Minister of Energy and Natural Resources Jonathan Wilkinson. "Through our work with the United States and other allies, we are developing secure critical minerals value chains that will power a prosperous and sustainable future."
Lomiko was one of two Canadian companies to receive co-investments from DOD and NRCan in May. Fortune Minerals Ltd., which is advancing a critical minerals supply chain centered on its NICO cobalt-gold-bismuth-copper project in Northwest Territories, is the other.
"As some of the first awards to Canadian public mining and mineral development companies, these grants exemplify the critical importance of DPA funds, the department's partnership with Canada, and our shared commitment to strengthening North American material supply chains," said U.S. Assistant Secretary of Defense for Industrial Base Policy Laura Taylor-Kale.
As DOD invests in accelerating the re-establishment of a North American supply of mined graphite, the U.S. Department of Energy is investing heavily in the processing link in the middle of the supply chain.
This includes roughly $320 million in loan guarantees and grants from DOE to help establish Syrah Resources Ltd.'s Vidalia graphite anode materials plant in Louisiana, which began production in February.
Capable of producing 11,250 metric tons (nearly 25 million lb) of graphite anode material per year during its initial phase of operations, Vidalia has begun to offer American automakers an alternative to China for EV battery anode material.
Tesla has entered into an agreement to buy roughly 70% of the graphite anode material produced during the first phase of operations at Syrah's Vidalia plant in Louisiana.
Most of the initial production from Vidalia is going to Tesla Inc., which has an agreement to buy 8,000 metric tons (17.6 million lb) of anode material from Vidalia per year, subject to the plant ramping up to adequate production and the output meeting the EV maker's qualifications.
As Syrah ramps Vidalia up to full capacity, which is expected by mid-2025, the Australia-based company is already working toward a major expansion that would nearly quadruple the Louisiana plant's anode material output.
To fund this expansion to 45,000 metric tons (99 million lb) per year, Syrah applied for an additional $350 million loan guarantee under DOE's Advanced Technology Vehicles Manufacturing program.
Last year, Syrah was also approved for a $150 million loan from the U.S. Development Finance Corp. for the Balama mine.
Sen. Murkowski is concerned that the U.S. government's heavy investment into stamping Mozambique graphite as "Made in America" due to it being processed in Louisiana comes at the expense of developing graphite mines on American soil.
"How can you tell me that the administration is really committed to domestic sourcing when we are not putting our resources there?" the Alaska senator asked DOE Deputy Secretary David Turk during a January Senate Energy and Natural Resources Committee hearing on EV supply chains.
"Right now, China absolutely dominates the graphite processing market," Turk responded.
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 is not likely to 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'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 active anode material being produced at Vidalia offers an 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 U.S. for many years to come," said Syrah Resources Managing Director Shaun Verner.
In addition to the loan guarantee from DOE, Syrah is evaluating commercial bank loans, partnerships, and other options to fund the planned expansions of its graphite processing plant in Louisiana.
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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