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ARPN followers are well-versed on the dangers of foreign resource dependency – a concern highlighted by Tesla Motors’ announcement earlier this year that the EV manufacturer will build a massive Giga-Factory in the American Southwest, with the goal of doubling global EV battery output by 2020. As ARPN’ers know, the next question is: Where will all the metals and minerals come from?

That question and more is answered in a new report co-authored by ARPN Expert Simon Moores LINK and his colleagues at Industrial Minerals Data.

As Simon writes:

“Does Elon Musk really know where Tesla Motors’ battery grade graphite comes from?

The chances are no, and neither do the sellers as the spotlight intensifies on the sourcing of critical minerals and metals that will fuel the new age battery economy

Tesla Motors’ CEO Elon Musk was forced to defend the company’s sourcing of graphite used in its electric vehicle (EV) batteries following a Bloomberg article in February linking the company to controversial graphite mining in China.

The link between Tesla – the US’ most high profile electric vehicle (EV) manufacturer – and environmentally damaging practices as far upstream as the mine seems harsh but is becoming unavoidable for large public companies.

In reaction to the story, Musk took to Twitter to explain that the company’s graphite was sourced in Japan and was mined on a “clean way”. But that didn’t really tell the whole story.

In fact, Japan does not operate any graphite mines. It sources all of its product from China.”

Read the full article @ data.indmin.com/Tesla

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.

Download a presentation on the subject here.

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.

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