More Graphite Needed

More graphite needed
Even if fully realized, Graphite One's 175,000 mt/year output would meet just 25% of the projected U.S. demand by 2034.

Amy Bennett, a principal analyst at Fastmarkets, forecasts a sixfold increase in U.S. graphite demand to 700,000 metric tons by 2034.

"This is a pivotal moment in the U.S. graphite sector, with the U.S. aiming to de-risk from China and become more self-sufficient in the graphite space, particularly for battery-grade materials," she penned in a late-2024 report.

Considering that the adoption of EVs is even stronger in Asia and Europe, the need for graphite mines and processing plants is staggering.

Benchmark Mineral Intelligence estimates that 31 new mines and 12 plants will be needed over the next five years to meet global demand for natural and synthetic graphite.

The world-leading lithium battery and critical minerals supply chain analyst says natural graphite is "one of the largest areas for concern" for the U.S. when it comes to securing the materials needed for EV batteries.

Graphite supply concerns were elevated with the 2024 shutdown of Syrah Resources' Balama mine in Mozambique, the largest graphite mine outside of China.


TexBr at stock.adobe.com
Civil unrest forced Syrah Resources to declare force majeure for its Balama graphite mine in Mozambique.

The U.S. government had bet heavily on Balama as a friendshoring alternative to China for graphite.

The federal backing of Syrah's graphite supply chain includes a $150 million loan from the U.S. International Development Finance Corp. (DFC) for the Balama mine and roughly $322 million in loan guarantees and grants from the U.S. Department of Energy (DOE) for Vidalia, a graphite anode materials plant Syrah is building in Louisiana to upgrade the graphite shipped from Africa.

Sen. Murkowski has expressed deep concern over the U.S. government's heavy investment in stamping Mozambique graphite as "Made in America" due to it being upgraded to anode material in Louisiana.

Her concerns have proven to be well-founded.

In 2024, Syrah was forced to shut down Balama due to local protests over grievances related to the resettlement of a group of farmers in the area where the mine is located. The intensity of these demonstrations grew with the civil unrest that gripped the nation following the national election in October.

Unable to fulfill its graphite contracts, Syrah declared force majeure for Balama and announced that it would not be able to make payment on more than $250 million in loans that it had received from U.S. government agencies.

As conditions gradually stabilized in the months that followed, Syrah resolved its differences with the resettled farmers, and by May, the newly elected Mozambique government stepped in to remove a small band of protesters from outside the region, clearing the way for crews to inspect Balama in preparation for scaling operations back up at the African graphite mine.

With access restored and assessments complete, the company began ramping up production at Balama in June, and the first bulk shipments of graphite to non-Chinese customers are slated for delivery by September.

Despite the setback, the U.S. government and American automakers remain hopeful that Syrah's Vidalia plant will be able to deliver the graphite anode material needed for EV batteries.

During President Biden's final week in office, the IRS awarded Syrah approximately $165 million in tax credit support for the potential expansion of Vidalia to 45,000 metric tons of anode material per year, four times the Louisiana plant's current capacity.

This federal backing was followed by Lucid Motors entering into a preliminary agreement to acquire Vidalia anode material for the EVs manufactured at its Arizona plant. Tesla also has a contract to source graphite anode material from Vidalia.