China limits exports of graphite, a key mineral for EV batteries
China limits exports of graphite, a key mineral for EV batteries
The global supply chain for pencils just got more complicated. China said Friday that it would start requiring stricter permits on exports of graphite, a key mineral component of pencils, but perhaps more importantly, a key mineral component of electric vehicle batteries. China produces two-thirds of the world’s natural graphite, according to the U.S. Geological Survey.
It’s the latest development in a China-U.S. trade war that’s making the transition to a green economy more expensive.
Graphite is kind of like the less attractive sibling of diamonds. Chemically, they’re both pure carbon, and both rely on pressure and temperature to be formed.
And while flaky, blackish-gray graphite won’t be involved in a lot of marriage proposals, it is key to many types of manufacturing.
“From steelmaking to semiconductors to electric vehicle batteries,” said Morgan Bazilian, a professor at the Colorado School of Mines.
He said you basically can’t build a lithium-ion battery without graphite, which means you can’t build an EV without graphite.
That’s a lesson China learned decades ago, when it invested heavily in graphite mining and refining. “They do not have the world’s largest reserves, but they do have the largest production,” Bazilian said.
Mozambique and Brazil produce some graphite, but way less than China.
Hugues Jacquemin is the CEO of Northern Graphite, whose site in Quebec, Canada, is the only major working mine in North America.
He said rising graphite prices will spur more investment. But it takes time to get a mine up and running and through environmental clearances. “It would take anything between 10 to 25 years from the moment you identify your deposit,” he said.
Graphite is just the latest flashpoint in the China-U.S. trade war.
Mary Lovely at the Peterson Institute for International Economics said China is, in part, just retaliating. This week, the Joe Biden administration restricted computer chip exports there.
“I think it’s a demonstration of its own power,” Lovely said. “You mess with me, I can mess with you.”
Meanwhile, you can pencil in higher costs for EVs, if you can afford a pencil.
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