Graphite shortfall.Graphite is a crystalline form of carbon. It...

Graphite shortfall.
Graphite is a crystalline form of carbon. It is an excellent conductor of heat and electricity and is chemically inert with high thermal resistance and lubricity. These properties make the mineral almost irreplaceable in a vast array of industries ranging from semiconductors to nuclear reactors. It is an abundant mineral around the world but is also produced synthetically. The demand for graphite has received a major boost from the auto industry that is undergoing a transition to electric vehicles (EV), powered by lithium-ion batteries, for now. Tens of millions of EVs are expected to hit the roads in the next decade as part of global net-zero carbon pledges, driving a fivefold increase in demand for anodes by 2030, according to Bloomberg NEF. Graphite producers are unlikely to meet the massive demand at the current rate of production. The world could witness a deficit of 85,000 tons of the mineral this year alone with electric vehicle sales expected to touch 10 million units, Benchmark Mineral Intelligence analyst George Miller told DW. "Graphite is often a very underrepresented critical mineral in the lithium-ion battery," Miller said. "Especially, not enough attention is paid to the potential for supply deficit and to the potential for the graphite market itself to become structurally affected by demand from electric vehicles. "Graphite flake prices in China stood at $760 per ton in early February, up by 11.8 per cent from January and up by 38.2 per cent from a year ago, according to Rystad Energy's monthly price index. The deficit is likely to keep graphite prices elevated for a while, further boosting battery costs which are already under pressure from high lithium and cobalt prices. That would be a setback for battery and automakers who are striving to bring down battery costs, which currently account for about 20-40 per cent of the price of an EV, in a bid to reach price parity with petrol and diesel cars.

Reshoring graphite production

The graphite supply squeeze is already prompting European and U.S. battery and EV-makers to speed up their efforts to source more graphite from outside of China as they look to cut their reliance on the Asian country and shorten their supply chain. Tesla — which in December bemoaned U.S. tariffs on Chinese graphite and asked the government to waive them, saying there was just not enough of the mineral elsewhere — signed a supply agreement with Australia's Syrah Resources for graphite anode material from a production plant that it is setting up in Louisiana.