Anode supply chain faces graphite ESG risk, Benchmark analysis

Only 6% of global graphite production this year will come from companies assessed as having “Good” or “Industry Leading” environmental, social and governance (ESG) practices, according to new research from Benchmark.

Just two graphite companies are assessed as having “Industry Leading” ESG practices data from Benchmark’s new Graphite ESG Report shows.

For natural graphite, no actively producing operations were found to demonstrate “Good” or “Industry Leading” ESG practices and disclosures.

Synthetic graphite, often flagged for its carbon intensive production process, fared marginally better, with one producer – Imerys, accounting for less than 1% of 2023 production – identified as having “Industry Leading” criteria.

Benchmark’s analysis identifies another six existing synthetic graphite producers as having “Good Practice” out of 134 total companies assessed. These companies account for close to 6% of the combined natural and synthetic graphite output for 2023 according to Benchmark’s Graphite Forecasts.

The findings underline that graphite sourcing risks stretch far beyond supply diversification. Global dependence on Chinese supply has exposed consumers to sustainability risks that have become inherent in the country’s domestic supply chains. This production has yet to receive the analysis or oversight needed to meet increasing Western consumer standards.

For both natural and synthetic graphite, there are no companies based in China with sustainability index scores that would place them in the “Good” or “Industry Leading” categories. Benchmark Source previously reported that three-quarters of the graphite anode supply chain is situated in China.

“There is still a lack of ESG awareness in the current graphite industry and suppliers are not prepared for sustainability criteria being increasingly applied to Western supply chains, now and in the near future,” Olivia Lin, an analyst at Benchmark, said.

Benchmark Graphite Sustainability Index

Benchmark’s new Graphite Sustainability Index scores companies on a scale of 1-100 based on topics deemed to be of material importance for ESG for the graphite industry. Benchmark assesses a set of 79 metrics including having policies for net zero, resettlement, and gender equality.

“This is a multi-stakeholder led process that identifies the material topics to be included,” Charlotte Selvey Miller, head of sustainability at Benchmark, said.

A score of over 70 deems a company “Industry Leading” and a score of over 55 deems a company as having “Good practice”.

“To be classified as “Industry Leading” shows that the company is progressive against industry peers in their efforts towards ESG policies, disclosures and transparency,” Selvey Miller said. “When a company is classified in the Index as “Good Practice”, we have noticed that companies are working towards ESG transparency and are making the right and more conscious steps to becoming a responsible company.”

Nouveau Monde Graphite is the only natural graphite developer in the pipeline that has demonstrated “Industry Leading” ESG practices, in the development of its Matawinie mine in Quebec, Canada. However, the project, which will produce graphite material for anode production, is not forecast to come online until at least 2025, underlining the lack of ESG transparency in the natural graphite space.

Imerys is the only synthetic graphite producer assessed as being Industry Leading in Benchmark’s Sustainability Index. It operates two small production facilities in Europe, though only its Swiss facility currently produces anode-grade synthetic graphite, according to Benchmark’s Synthetic Graphite Forecast.