Lack of processing facilities
Mined graphite is usually processed to 95-96% carbon purity on site, but must be processed further elsewhere into a spherical, coated 99.95% purity product to be used in battery cells.
Almost all these facilities are concentrated in China, even with the development of mines elsewhere.
"It's a case of trying to localize supply as much as anything and... ensure the quality of material makes its way to the supply chain," the analyst said.
A number of players are looking to remedy this. Tirupati is expanding its Patalganga graphite processing facility near Mumbai and building another in Odisha, with Poddar saying it would look to develop processing facilities in Europe and the US in the future.
Syrah Resources is expanding its Vidalia battery anode material facility in Louisiana to 11,250 mt/year, which will process natural graphite from its Balama mine in Mozambique into active anode material.
Walkabout is concentrating on getting the initial mine into production and the plant running profitably, but might also look into the downstream option of beneficiating graphite for specialized markets in the future, Cunningham said.
More investment needed
To ensure enough supply meets demand, more investment is needed in graphite mining and processing, industry players told Platts.
"It's fairly similar to other battery markets where there's been underinvestment upstream for quite a long period," the battery analyst said.Poddar said various bipartite arrangements should be looked at by prospective producers and end-users.
"If we put in sufficient input, which includes developing core expertise, core projects, deciphering more resources and developing them, in which all concerned parties would possibly need to play a role... it's not impossible that we meet our graphite needs at 2030," he said.
"It is likely that we will not as of today, based on the ecosystem that exists today, but there is time to achieve the targets." He said African governments also had to ensure their regulatory frameworks improved to be more conducive to investment.
While Poddar said graphite could be lucrative from an investor perspective, BMO Commodities Research Managing Director Colin Hamilton told Platts that, as with other battery metals, everyone was still learning and investors tended to focus on commodities they knew and were comfortable with.
"There is interest, but these projects are so small-scale and the technical challenges are there," Hamilton said. "No one understands it... if an investor asks what's the graphite price, it's very hard to get it because it's not freely available."
"It's the education process and also visibility... people will be wanting price history that frankly we don't have and that makes it harder to fund some of these projects."
Another issue was that, while graphite use in anodes is well established, this chemistry is due to change with the rise of solid-state batteries, which also harmed graphite's investment case, Hamilton said, as few investors were interested in something with only a five-to-ten-year demand cycle."What I'd say on the graphite side, and this is true across all metals, is that people are looking for alternatives for that China value chain and that is key across everything," Hamilton said.
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