CHINA RESTRICTS GRAPHITE EXPORTS AS OF DEC 1, page-16

From Fin Review

Graphite stocks surge as Beijing opens new frontier in trade war

Elouise FowlerReporter

Oct23, 2023 – 4.06pm

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Australian graphite stocks surged afterChina announced export controls restricting supply of one of the key battery minerals required for electric vehicles, opening a new frontier in a trade war with the US and its allied nations.

China is the world’s top graphiteproducer and exporter, and also refines more than 90 per cent of the world’s graphite into material used in electronics and defence applications including weapons systems.

On Friday, China’s commerce ministersaid Beijing would require export permits for some graphite products to protectnational security, escalating the tit-for-tat trade war that spanssemiconductors to raw materials.

The export controls on graphite comeas the trade war between China and US-allied countries intensifies over technologyand commodities.

It comes as Beijing weaponised itsdominance earlier this year over galliumand germanium by imposing restrictions on exporting the two processed metals crucial to the semiconductor, EV and weapons industries.

The US and its allies are seeking tobreak China’s grip on strategic materials.

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But there are few non-Chinese optionsto procure graphite which is one of 50 minerals listed by the US, and one of 26 commodities identified by Australia as being critical to national security and economic growth.

This triggered shares in ASX-listedSyrah, the largest graphite producer outside China, to soar 44 per cent onMonday afternoon to 76.5¢.

Syrah, AustralianSuper’s preferredbattery minerals miner, produces graphite from its Balama mine in Mozambique, and is on the cusp of opening its battery anode factory in the US.

Walkabout Resources, which isdeveloping a graphite mine in Tanzania, surged 18 per cent to 13¢. Shares inBlack Rock Mining, which is also developing a mine in Tanzania, climbed 25 percent to 12¢.

Graphite hopeful Renascor Resources,which has plans to build a mine in South Australia and an accompanying batteryanode material manufacturing plant in Port Adelaide, jumped 31.8 per cent to14¢.

Beijing’s move to block graphiteexports from December 1 comes after the US widened curbs on Chinese companies’access to semiconductors, including stopping sales of more advanced artificial intelligence chipsmade by Nvidia.

But amid fierce competition on thisfrontier of the trade war, Beijing signalled at the weekend it intends todismantle punitive wine tariffs, the last big sanctions it has on Australianexports, first imposed in 2020 to show displeasure with the former Morrisongovernment.

The announcement was made ahead ofPrime Minister Anthony Albanese’s visit toWashington and clears the way for the first visit to China by an Australian prime minister in more than seven years.

Beijing’s move to curb graphiteexports comes as the European Union is also weighing levying tariffs onChinese-made EVs, arguing they unfairly benefit from subsidies.

Chinese EV makers are quickly gainingan edge over European and US carmakers in the battle for market dominance,especially as Chinese automakers adopt cheaper lithium iron phosphate or LFPbatteries.

LFP batteries, which require largeamounts of graphite, are a form of lithium-ion battery. This type of battery isnot as robust because it requires more frequent charging but UBS expectsautomakers will look past this to embrace its cheaper cost and lower carbonprofile.

Lachlan Shaw, lead analyst on theresearch released earlier this month, forecasts natural graphite prices willfetch $US850 ($1347) a tonne by the end of the decade, because of a sixfoldincrease in demand to 6.3 million tonnes by 2030. That’s a 50 per cent recoveryfrom the $US570 per tonne spot price earlier this month.