Graphite is a key component of lithium-ion batteries, which are widely used in electric vehicles (EVs), smartphones, laptops, and other devices. Graphite is the main material in the anode, the negative electrode that stores and releases electrons during charging and discharging. Graphite accounts for more than 50% of the weight of a typical lithium-ion battery, and its demand is expected to grow as the battery market expands.

Graphite has several advantages over other anode materials, such as silicon, tin, or lithium metal. Graphite has high electrical conductivity, which allows fast and efficient electron transfer. Graphite also has high energy density, which means it can store more energy per unit volume. Graphite is relatively cheap and abundant, making it cost-effective and scalable for mass production. Graphite is also stable and safe, as it does not react violently with the electrolyte or cause thermal runaway.

The Rise of Electric Vehicles and the Demand for Graphite

The main driver of graphite demand is the global adoption of EVs, which rely on lithium-ion batteries for power. EVs are becoming more popular due to their environmental benefits, as they emit zero tailpipe emissions and reduce greenhouse gas emissions. EVs are also supported by various government policies, incentives, and regulations that aim to reduce carbon footprint and promote clean energy. Moreover, EVs are becoming more affordable and attractive to consumers, as the battery costs decline and the performance, range, and design improve.

According to Bloomberg, EV sales in the European Union (EU) surged by 62% in the 12 months to July 2023, reaching 2.1 million units. The EU is the largest EV market in the world, followed by China and the US. Analysts at UBS predict that EV sales in Europe will grow to 2.5 million in 2024, 3.6 million in 2025, and 9.6 million in 2030, with the global EV market share reaching 47% in 2030.

The growth of EVs will increase the demand for graphite, as each EV requires about 60 kilograms of graphite for its battery. According to Roskill, a leading provider of market intelligence on critical and strategic minerals, the global graphite demand for batteries will increase from 260,000 tonnes in 2020 to 2.25 million tonnes in 2030, a nine-fold increase. Graphite will remain the dominant anode material for lithium-ion batteries, despite the emergence of alternatives such as silicon or lithium metal.

The Challenges and Opportunities for Graphite Supply

The increasing demand for graphite poses some challenges for the supply side, as most of the graphite production and processing is concentrated in China. China is the world’s largest producer and exporter of natural and synthetic graphite, accounting for more than 70% of the global supply. China also controls most of the value chain for battery anode materials, such as spherical graphite, which is a purified and shaped form of graphite that enhances the performance of lithium-ion batteries.

However, China’s dominance in the graphite market may be challenged by some recent developments, such as the export controls, environmental regulations, and geopolitical tensions. In October 2023, China announced that it would impose export controls on graphite products, including those used for battery anodes, as part of its efforts to protect its national security and strategic resources. The export controls, which took effect from 1 December 2023, could disrupt the global supply of graphite and increase the prices and risks for the battery industry.

The export controls could also create opportunities for ex-China graphite producers and processors, especially those in Europe, which is the largest importer of graphite from China. Europe is also committed to developing its own battery industry and supply chain, as part of its Green Deal and Industrial Strategy.

The European Commission has proposed to extend the current rules of origin for EVs and batteries under the EU-UK Trade and Cooperation Agreement, which require a minimum of 30% of the battery materials to be sourced from the EU or the UK.

The Commission has also proposed a new financial incentive for the battery industry, which would provide up to €2.9 billion for research and innovation projects on batteries and related technologies.

One of the potential beneficiaries of these developments is the proposed Wilton AAM facility, which is a joint venture between Britishvolt, a UK-based battery cell manufacturer, and Talga, an Australian graphite producer and developer. The Wilton AAM facility aims to produce 25,000 tonnes per year of anode active material (AAM), which is a coated and ready-to-use form of spherical graphite, for the European battery market.

The facility will use Talga’s natural graphite from its Vittangi project in Sweden, which has a high purity and low impurity level, making it suitable for battery applications. The facility will also use Britishvolt’s proprietary coating technology, which enhances the performance and safety of the AAM. The Wilton AAM facility is expected to start production in 2024, and could create up to 300 jobs in the UK.

Conclusion

Graphite is a vital material for lithium-ion batteries, which power the future of EVs and other devices. Graphite demand is expected to grow significantly as the EV market expands, driven by environmental, economic, and social factors. Graphite supply faces some challenges and opportunities, as China’s export controls create uncertainties and risks, but also open up new possibilities for ex-China producers and processors, such as the Wilton AAM facility. Graphite is powering the future of EVs, and the future of graphite is bright.