The following is a guest post by American Resources expert Simon Moores.
Wide-reaching controls on China’s natural resources continue to be at the forefront of its shift to a high value economy.
Already industries like rare earths and phosphate fertilizer are tightly controlled by government-forced regulation. The question remains whether graphite – the 9th most critical raw material according to the British Geological Survey – is headed for the same fate.
Natural flake graphite is used as a key component in all battery technologies, the batteries that will power a shift to electric vehicles and the batteries we all rely on for mobile technology today. China controls 70% of supply while the USA has no active production. In fact, the whole of North America only produces 3% of the world’s flake graphite from one mine in Quebec, Canada.
Buyers of graphite – which are predominately steel refractory manufacturers – have become over-reliant on cheap product from China, but those days appear to be over as the country looks towards limiting low value exports in favour of high value domestic manufacturing.
Common restrictions the Chinese government has imposed on its miners include:
- Closure of smaller mining pits under 20,000 tonnes/year to encourage larger pits and economies of scale
- Closure of older, inefficient processing plants
- Installation of plants capable of producing value added products such as spherical graphite
- Redirection of raw flake graphite material to these value-added plants and away from exports
- Potential for an export quota system such as in the magnesia and fluorspar industries in the past
- Heavier taxes for exports of raw flake graphite material
If even some of these come to fruition in the future, the global graphite supply landscape could look very different.
For companies and countries used to counting on China for a relatively cheap and reliable graphite supply, Moore’s assessment is a warning sign that future supply may be far less certain.