Graphite has moved to the forefront of the green energy transition due to being one of the most significant components of lithium-ion batteries (LIBs). LIBs are used to power electric vehicles (EVs); made of two electrodes — an anode (negative) on one side and a cathode (positive) on the other. Graphite is currently the only material that can be used in the anode.
Graphite has the highest specific energy of all materials and is also used as a flake material. The material layered spacings allow manufacturers to use it as an anode in a battery by inter-organizing lithium into those layers, as it has a range of different properties. Other allotropes, such as diamonds, amorphous carbon, or hard carbons cannot function the same.
Combined with its superior natural strength and stiffness, graphite is a strong conductor of both electricity and heat, making it the perfect carbon for battery materials.
With its strong conductive properties, more and more manufacturers are looking to secure graphite supply chains, particularly to cope with the growing demand for EVs. Not only EVs, but the energy revolution and the push for lower carbon emissions in general are unrelenting trends that will continue to intensify in the coming decades. The need for energy storage is projected to be so high that production of key battery metals like graphite will need to ramp up to unprecedented levels.
Chinese graphite production
According to Statista, in 2022 the total global production volume of graphite was an estimated 1.3M metric tons. China is the world’s leading producer of graphite, has the third largest reserves, and accounts for the greatest share of the United States’ graphite imports.
Currently, China produces 75 – 80% of the world’s graphite and a significant proportion of the natural graphite used in LIBs. Due to this dependence on China, as well as the importance of graphite to the economy, both the EU and the US have declared graphite a supply critical mineral.
Future Chinese production of graphite will be an important factor in determining graphite prices. Over the last few years, Shandong province was the nucleus of graphite mining in China, especially with the enormous Pingdu mine. More recently, however, production levels have been declining due to the reduction of ore reserves and increasingly rigorous implementation of environmental regulations.
According to Northern Graphite, because Shandong was the main source of spherical graphite (SPG), production of these grades is also declining in tandem. Mining has transitioned to Heilongjiang province and is now the major producer. There are two main producing areas in Heilongjiang, Jixi/Mashan and Luobei, both of which produce mainly small flake.
There do not appear to be any new mines planned or under construction in Jixi/Mashan. Luobei was principally built to serve the LiB market and is only operating at 30% capacity.
Turkish graphite production
The country with the largest volume of graphite reserves in the world is Turkey. In 2022, Turkey had approximately 90M metric tons of natural graphite reserves.
While the country has a graphite mining history of more than 30 years and the world’s largest reserves, production limits remain below economic benefits due to lack of exploration knowledge and technological background to increase ore grades. Overall, graphite production in Turkey is not competitive on the world’s graphite market, and domestic need is usually met by importing from other countries.
There is only one active graphite mine, located in the Kutahya district of Western Turkey. The facility in Kutahya-Altıntaş is designed to produce 22,000t of raw graphite and 8,000t of enriched graphite per annum if working at full capacity.
The need for energy storage is projected to be so high that production of key battery metals like graphite will need to ramp up to unprecedented levels.
Madagascan graphite production
Madagascar was one of the largest graphite producing countries worldwide in 2022. Statista estimated Madagascar’s graphite production at 110,000 metric tons last year.
This level of production was significantly more than in previous years, rising from the fifth spot in 2021 to rank as the second largest graphite-producing country last year. The African nation also has the fourth largest graphite reserves. According to the US Geological Survey, large graphite deposits are being developed in this island country in the Indian Ocean.
Growth in Madagascar’s graphite-mining industry includes new projects with the potential to come online in the coming years, including NextSource Materials’ (TSX: NEXT | OTCQB: NSRCF) Molo graphite project, which is due to commence production in 2023.
Brazilian graphite production
A report produced by GlobalData states that Brazil accounts for 5% of global production. Exports of graphite from Brazil declined by 2.47% to 19Kt in 2022 from the previous year, with the highest share being exported to Germany. Brazil’s graphite exports are expected to grow at a CAGR of 6% between 2022 and 2026, to 24Kt by 2026.
In terms of reserves, the global natural graphite reserves stood at 330Mt as of January 2023.
Currently, the Santa Cruz Project owned by South Star Battery Metals Corp. (TSXV: STS) is believed to contain one of the biggest flake graphite reserves in the Americas and is estimated to hold 12.3Mt of proven and probable ore reserves containing 295,400t of graphite concentrates.
European graphite production
Graphite production in the EU is limited, due to restricted natural graphite mining capacities and inadequate processing capacities for spherical graphite.
There are currently only two active graphite mines in the EU, operating in Austria. Corina Hebestreit, secretary general of the European Carbon Graphite Association (ECGA) stated for Fastmarkets,
“Currently, there are only two mines in Europe [and they] do not even deliver into the battery anode market,”
“To have a valid reference point for permitting, there would have to be at least three mines and processing facilities with comparable technology, or you would have to compare worldwide.”
For upstream projects to get off the ground, they need to win permission from the EU, but gaining permits is made more difficult by the lack of existing projects to provide benchmark comparisons.
“It is very difficult to predict the volume of European [graphite] flake production that will come onstream in the next 10 years, but it is possible that Europe will be able to meet 20% of natural flake graphite demand with its own production.” Hebestreit added.
