Talga TLG - General Discussion, page-324

Bit dated- Oct 2023, Impact of China's Graphit Export Controls

"With the strategic status of graphite resources increasingly recognized, in 2010, the European Union listed graphite as one of 14 scarce mineral resources. In 2013, the United States designated graphite as one of the strategic minerals that are difficult to acquire. In 2016, China included crystalline graphite in the catalogue of strategic minerals. On October 20, 2023, China officially added three highly sensitive graphite items, including spherical graphite, to the dual-use items export control list."


https://news.metal.com/newscontent/102432316/how-will-china%E2%80%99s-imminent-export-curbs-on-emgraphiteem-impact-electric-car-industry

Why Implement Export Controls?

"In the new energy vehicle industry, graphite is a commonly used material for the anode of power batteries," Xue Xu, Associate Professor at the School of Economics, Peking University, told reporters from "China Automotive News". He further stated that graphite is also a key resource in new energy vehicles, high-end equipment manufacturing, strategic emerging industries, and the nuclear power field. It is listed on both the United States' "Critical Minerals List" and China's "Strategic Mineral Resources List".

According to a recent report by the International Energy Agency, in order to achieve the goal set forth by the Paris Agreement of limiting global warming to within 2 degrees Celsius, the demand for clean energy minerals worldwide will need to at least double by 2040. The demand for minerals related to electric vehicles is projected to increase 30-fold, with lithium leading the way with a 42-fold increase, followed by graphite with a 25-fold increase. Cobalt and nickel are also expected to see significant growth, increasing by 21 and 19 times, respectively. Additionally, a single layer of carbon atoms can be stripped from graphite to create graphene, a new material that boasts greater strength than steel, superior electrical conductivity, and higher thermal conductivity. Graphene can be used in batteries to enhance their energy efficiency and safety.

Take the example of the graphene-based super-fast charging battery launched by GAC Aion, which can be charged to 80% of its capacity in just 8 minutes, boasting a range of up to 1000 kilometers.

Due to its unique structure, graphite possesses a multitude of properties such as high-temperature resistance, thermal shock resistance, electrical conductivity, lubricity, chemical stability, and plasticity. These properties make it an indispensable strategic resource for modern industrial development. Graphite is widely used in traditional industrial fields such as refractory materials, electrode brushes, pencils, casting, sealing, and lubrication. It's often referred to as a "strategic resource supporting the development of high-tech in the 21st century".

Previously, graphite consumption in low-end consumer sectors such as refractory materials and casting accounted for approximately 75%, while high-end market consumption in high-tech industries such as new energy vehicles, electronic information, and the nuclear industry accounted for about 25%. At present, with the advancement of technology and the surging demand in the new energy vehicle market, the consumption of graphite in high-end markets is gradually increasing. Currently, the consumption share in the new energy vehicle power battery sector alone has exceeded 50%, making it the number one consumer sector for graphite. Graphite has become one of the essential raw materials to ensure the stability of the new energy vehicle industry chain and enhance its core competitiveness.

It is reported that the distribution of graphite resources globally is quite concentrated, with only a few countries possessing abundant graphite mines. According to data from the United States Geological Survey, as of the end of 2022, the proven reserves of natural graphite resources worldwide were approximately 330 million tons. Turkey has the largest graphite reserves, accounting for 27.3% of the global total, followed by Brazil with 22.4%. China ranks third, accounting for 15.8%, and Madagascar is fourth with 7.9%. As one of the few countries with a full range of graphite resources, China's total reserves have long been amongst the world's highest, with approximately 260 million tons of crystalline graphite resources alone. Currently, China has established six major graphite production and processing bases, accounting for over 80% of the country's total output.

In recent years, the imported graphite products in China's graphite trade are often high-value, high-tech processed products, while exports are dominated by low-value, low-tech graphite products. The price of imported graphite in China is higher than the international trade average, while the export price is slightly lower than the international export price, creating a situation where low-value products are exported and high-value products are imported. Over the past two years, with a significant improvement in domestic graphite industry technology, this situation has improved, but there still exists a certain gap compared with developed countries.

With the strategic status of graphite resources increasingly recognized, in 2010, the European Union listed graphite as one of 14 scarce mineral resources. In 2013, the United States designated graphite as one of the strategic minerals that are difficult to acquire. In 2016, China included crystalline graphite in the catalogue of strategic minerals. On October 20, 2023, China officially added three highly sensitive graphite items, including spherical graphite, to the dual-use items export control list.

"As the relevant authorities have stated, implementing export controls on specific graphite items is an internationally accepted practice," Professor Liu Rui from the School of Applied Economics at Renmin University of China told reporters from "China Automotive News". He emphasized that this move would be beneficial for ensuring the safety and stability of the global supply chains, such as that of new energy vehicles. The significance of this action is profound and very much necessary.