General Discussions, page-28646

| Resource Rising Stars (resourcesrisingstars.com.au)

The graphite price might not reflect it, but there are serious concerns about how the forecast demand growth for the anode material for lithium ion batteries will be met in coming years.

The concerns go beyond simply the lack of new mine developments and the current lack of incentive pricing to meet the expected demand growth, with serious supply shortages possibly emerging well before the end of the decade.

Beyond the current lack of incentive pricing, the concerns also take in China’s grip on the key battery material (unlike lithium, graphite is present in all of the key battery technologies), from natural and synthetic graphite, through to battery-ready material.

That grip was tightened in December when China implemented curbs on exports of natural graphite under “national security” concerns. Export permits (control) are now in place for graphite products critical to battery production.

China's commerce ministry said the move on graphite was "conducive to ensuring the security and stability of the global supply chain and industrial chain, and conducive to better safeguarding national security and interests”.

It seems that China wants to ensure its plans to dominate the global EV industry cannot be derailed because of the coming graphite shortage. It already has its nickel supplies stitched up through its sponsorship of the explosion of nickel production in Indonesia.

That swings the spotlight over to the other concern – the sustainability of the environmentally-gross production of graphite in China’s mainland industry, particularly the synthetic stuff.

No one wants a “blood” diamonds. No one wants conflict gold. And before long, no one will want dirty Chinese graphite in their shiny new EV. The pushback is already underway.

The December export controls put in place by China and rising sustainability concerns have served to steel the will of governments with big auto industries - the US, Europe & the UK, Japan and Korea - to build an ex-China supply chain.

The lead ASX-listed graphite stock Syrah (SYR) is a beneficiary having recently became an integrated producer by matching up its graphite mine in Mozambique to an active anode material operation in the US with the help of the US taxpayer.

And the Australian taxpayer is ready to support the plans by Renascor (RNU) to become an integrated producer (to the purified spherical graphite level) from its graphite deposit in South Australia.

Both companies have had their share prices smashed in response to the slump in graphite prices due to low cyclical demand in China, inventory drawdown in China and the over-investment in synthetic graphite in China taking natural graphite prices down with them.

But as suggested, it seems that both companies will have their day in the sun before long.