China restricts exports of graphite used to make battery anodes

China’s commerce ministry has put the world’s battery industry on notice by restricting the export of some graphite materials that are used to make anodes for lithium-ion batteries. The move is calling attention to China’s dominance of the market and providing a push to establish graphite processing outside the country.

Graphite anodes can be produced from synthetic graphite—made by heating petroleum coke—or from mined graphite flakes. Graphite flakes must be milled into spherical particles and then coated with carbon. Both forms are mixed with binders to create a battery anode.

Starting in December, companies in China will have to get permission to export some forms of natural and synthetic graphite materials that are used to make anodes.

Over 60% of the world’s mined graphite and nearly half of synthetic graphite is produced in China, according to the US Geological Survey. The country also dominates processing steps further down the supply chain. The research firm Benchmark Mineral Intelligence estimates that Chinese firms produce 99% of spherical graphite and 93% of all graphite anode materials.

James Willoughby, a graphite analyst with the consulting firm Wood Mackenzie, says the restriction demonstrates China’s control of the graphite market but may not significantly slow battery makers outside China.

Over the summer, the country placed similar restrictions on the export of gallium and germanium. While that caused a slowdown in trade for several months, exports have started again, Willoughby says. “It doesn’t seem like they’ve turned off the tap,” he says. “They just wanted to sort of show that they have control.” He says the graphite market might follow a similar path.

Even before the export restrictions, several companies had announced intentions to establish graphite mining and processing or anode material production outside China.

Anovion and Novonix, for example, are planning synthetic graphite anode material plants in the US.

Westwater Resources is planning a graphite mine and processing facility in Alabama. With financial support from the US government, Syrah Resources is nearing completion of a plant in Louisiana that will produce anode material from natural graphite. The company says it already has customers. Both firms expect Chinese export restrictions to boost their business.

Graphex Technologies is building facilities in Michigan that will produce spherical and carbon-coated natural graphite. CEO John DeMaio says the Chinese restrictions only emphasize the need for what the company already has planned. “We saw the size of the opportunity here in North America,” he says. “We knew there was going to be a need for a localized supply chain.”

But it won’t be easy for battery makers to transition to a battery anode supply chain that avoids China, according to Daisy Jennings-Gray, an analyst with Benchmark. She says it will take a long time to build anode production capacity and get the material qualified by battery makers.

“This announcement has certainly put graphite, and anodes, on the radar in the West,” she says. “There won’t be a quick pivot away from the reliance on graphite and anodes from China.”