Shortage of battery-grade graphite could slow down EV adoption

Graphite is a critical mineral for battery anodes, and surging demand for EVs is colliding with a limited global graphite supply.

George Miller, an Analyst at data provider Benchmark Mineral Intelligence, recently told the South China Morning Post that global EV sales are widely expected to reach up to 11 million units in 2022, and this could translate to a deficit of around 40,000 tons of graphite. “There is a potential for a raw material deficit in graphite…which would hamper utilization rates at [battery] cell and electric vehicle production facilities.” The shortfall could “push out the timeline for wider integration of electric vehicles in society,” said Miller.

Benchmark predicts that graphite demand will increase by an average of 18 percent each year until 2030. “The demand outlook is incredibly strong for graphite. It will remain a critical mineral for the lithium-ion growth story and the energy transition,” said Miller.

Benchmark isn’t the only research firm sounding the alarm. Commodities consultancy Wood Mackenzie expects total graphite demand to double by 2035. While graphite itself is not scarce, the supply of battery-grade graphite is much tighter, Wood Mackenzie Principal Analyst told the SCMP.

China currently accounts for 76 percent of the world’s natural graphite supply and 56 percent of synthetic graphite supply. “Chinese production is typically much less expensive than that in other regions because of lower costs for labor, energy and reagents,” said Shaw.

“There is tightness in the graphite anode market which will likely last till the end of this year,” Daiwa Capital Markets Analysts Dennis Ip and Leo Ho told the Post, adding that graphite represents around 5 to 15 percent of the cost in a typical EV battery.

Source: South China Morning Post