Natural Flake Graphite in high demand and set to increase with forecast shortfall

Natural flake graphite is in high demand and projected to grow further, with a potential supply shortfall on the horizon. This increasing need is largely fueled by its critical applications in lithium-ion batteries and other advanced technologies, underscoring its importance in the transition to sustainable energy solutions. With China supplying about 65-70% of the world’s natural graphite, any disruptions—whether from seasonal shutdowns or stricter environmental regulations—can significantly impact global supply chains.

As the market evolves, the pressures on supply chains could intensify, highlighting the need for reliable sources of natural flake graphite such as our Epanko Graphite Project.

Demand

The increase in demand for graphite continues to be driven by the global transition to electric vehicles (EV), which are powered by lithium-ion batteries. Despite a recent slowdown in EV markets, long-term growth forecasts remain strong, with EV sales growing year on year. Developing new supply lines is now a priority by governments.

Supply

China’s dominance in the downstream battery supply chain, including processing of the battery minerals, cathode and anode material production, and battery cell and EV production continues to be the major determinant in the global graphite supply. As the world undertakes to reduce supply dependency on China, legislation is being enacted to support new supply chains.

The most significant of these is the Inflation Reduction Act (IRA) legislated in the United States which offers funding programs, and incentives to invest in domestic energy production while promoting clean energy. In addition to promoting domestic production, eligible tax credits for an electric vehicle under the IRA are only available if the supply source in the manufacturing process is not derived from a foreign entity of concern (FEOC), which includes supply sources from China.

In May 2024, the European Union legislated the Critical Raw Materials Act aiming to ensure a secure and sustainable supply of critical raw materials, which includes graphite, for the EU.

To further support the need to diversify the supply chain, China imposed restrictions, effective 1 December 2023, on the export of certain types of graphite, including natural graphite.

Global Legislation
 

US Legislation

IRA, MS, DoE, DoD have pushed development and funding into localised resources in North America with tax credits supporting new supply chains. Exemptions end 2027. New 25% tariff on FEOC (China) anode.

EU Legislation

The EU Green Deal and Critical Raw Materials Act support supply chains that satisfy green targets for mining, manufacturing and recycling. CRMA is now law with Strategic Projects focus. Battery passport, localisation and CO2 targets will restrict foreign synthetic graphite imports.

Chinese Legislation

Chinese Government export licence controls implemented from 1 December 2023 for designated graphite and anode products. Current anode manufacturing is heavily reliant on China.

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