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grade graphite shortage on horizon as demand rockets","battery-grade-graphite-shortage-on-horizon-as-demand-rockets","article/battery-grade-graphite-shortage-on-horizon-as-demand-rockets",{"_uid":557,"date":558,"tags":559,"editor":560,"content":570,"excerpt":578,"featured":50,"reporter":868,"_editable":872,"component":873,"seo_title":553,"categories":874,"visibility":884,"author_company":49,"featured_image":885,"seo_description":578,"author_full_name":49,"author_job_title":49,"formattedDate":890,"formattedArticleDate":891},"c4c4e27c-a014-4c81-879c-29ce096ee0af","2016-07-21 00:00",[],[561],{"slug":562,"name":563,"content":564},"didi-bostock","Didi Bostock",{"job_title":565,"image":566,"bio":568,"linkedin":569},"Editor - Energy Transition & Economics",{"filename":567},"https://a.storyblok.com/f/287943243085208/512x512/2c5ca5c1a3/didi-bostock.jpeg","Didi is the Energy Transition & Economics Editor at Benchmark, covering a broad range of markets across the energy transition. His remit spans from downstream sectors such as BESS and EVs, through to midstream such as new technologies and battery production, to upstream critical minerals mining. He also leads on financial analysis across these supply chains, alongside in-depth policy analysis.\n","https://www.linkedin.com/in/didi-bostock-656342198/",{"type":571,"content":572},"doc",[573,580,585,590,595,600,605,610,615,620,625,630,635,640,645,650,655,660,663,668,673,678,683,688,693,698,703,708,715,720,725,730,735,740,745,750,755,760,765,770,775,780,785,790,793,798,803,808,813,818,823,828,833,838,843,848,853,858,863],{"type":574,"attrs":575,"content":576},"paragraph",{"textAlign":49},[577],{"text":578,"type":579},"Anode demand in China is surging as Beijing turns to lithium ion powered electric buses and cars to solve its air quality problem, a situation now at critical Demand for graphite (carbon) used as anode material in lithium ion batteries is set to increase by over 200% in the next four years as global cell production surges on the back of maturing pure electric vehicle (EV) demand and the inception of the energy storage in the utility sector.","text",{"type":574,"attrs":581,"content":582},{"textAlign":49},[583],{"text":584,"type":579},"China’s concern over the air quality of its cities, especially its capital, is forcing the country to act rapidly to solve an issue that has reached a critical level. In 2015, Beijing issued its first ever air pollution “red alert” forcing the capital’s schools to close and outdoor work to come to a halt.",{"type":574,"attrs":586,"content":587},{"textAlign":49},[588],{"text":589,"type":579},"The country sees EVs as the most immediate solution to the problem, particularly for vehicles used in city centres such as pure electric buses and cars. Beijing already issues significant subsidies for e-bus production, a situation that was a major contributor to the lithium price spike.",{"type":574,"attrs":591,"content":592},{"textAlign":49},[593],{"text":594,"type":579},"But with a wide range of pure electric buses and cars scheduled to hit the Chinese market in the next 4 years, the implications for battery raw material demand are significant, especially for the little known anode market.",{"type":574,"attrs":596,"content":597},{"textAlign":49},[598],{"text":599,"type":579},"New data from Benchmark Mineral Intelligence forecasts the anode market – which is nearly exclusively served by naturally sourced spherical graphite and synthetically produced graphite – to increase from 80,000 tpa in 2015 to at least 250,000 tpa by the end of 2020 while the market could be as large as 400,000 tpa in the most bullish of cases with no supply restrictions.",{"type":574,"attrs":601,"content":602},{"textAlign":49},[603],{"text":604,"type":579},"Taking the most conservative case, Benchmark estimates that over 360,000 tonnes of medium flake graphite will be needed as a feedstock source for the spherical material by 2020. This is nearly a doubling of the flake concentrate market in 2015 should the naturaltosynthetic demand proportions remain the same in 2020.",{"type":574,"attrs":606,"content":607},{"textAlign":49},[608],{"text":609,"type":579},"At present, China produces 100% of the world’s spherical graphite which is predominately produced from flake sourced from mines in Heilongjiang province in the country’s north-east, but there have been a number of new companies entering the scene looking to create new spherical plants outside of China.",{"type":574,"attrs":611,"content":612},{"textAlign":49},[613],{"text":614,"type":579},"The most significant development to date has been Syrah Resources’ Balama Project in Mozambique. The fully funded mine will begin flake graphite production in Q2 2017, but the company is positioning itself to serve the burgeoning global anode market with a spherical plant in Louisiana, US, and recently announced a 50,000 tpa coated spherical supply agreement last month with Japanese trader Marubeni Corp.",{"type":574,"attrs":616,"content":617},{"textAlign":49},[618],{"text":619,"type":579},"“[The deal] provides an insight into the demand for spherical graphite currently required by Korean and Japanese battery producers… This should also be viewed as validation for the use of natural graphite in the anode industry,” Managing Director, Tolga Kumova, explained to Benchmark in an interview.",{"type":574,"attrs":621,"content":622},{"textAlign":49},[623],{"text":624,"type":579},"“It is also important to understand that this 50,000 tpa spherical off take is for Japanese and Korean battery producers. Syrah will also look to service the explosive demand being witnessed in the Chinese market,” he added. Demand for anode material has been rising significantly. Last year, the world’s spherical graphite output was 52,000 tpa rising from 37,000 tpa the year before. China has also enacted spherical graphite expansions over the last 12 months in anticipation of the further demand increases.",{"type":574,"attrs":626,"content":627},{"textAlign":49},[628],{"text":629,"type":579},"In another example, Alabama Graphite are developing a USbased spherical plant. The project is targeting a start-up capacity of 5,000 tpa of coated spherical graphite rising to 15,000 tpa to meet domestic US demand.",{"type":574,"attrs":631,"content":632},{"textAlign":49},[633],{"text":634,"type":579},"The company will supply the feedstock flake by restarting in Coosa County, Alabama while the spherical plant is being planned for Rockford, 30km away.",{"type":574,"attrs":636,"content":637},{"textAlign":49},[638],{"text":639,"type":579},"“We will produce two products for the US lithium-ion battery market — namely, coated spherical purified graphite for lithium-ion batteries and purified micronized graphite (PMG) [initially] for alkaline batteries and composites,” President and CEO, Donald Baxter explained to Benchmark.",{"type":574,"attrs":641,"content":642},{"textAlign":49},[643],{"text":644,"type":579},"“[Our coated spherical graphite material] was proven suitable for lithium-ion battery use, and it performed better than costlier and environmentally questionable synthetic graphite.”",{"type":574,"attrs":646,"content":647},{"textAlign":49},[648],{"text":649,"type":579},"“Primary and secondary processing plants will produce 5,000 tonnes of specialty high-purity graphite products annually, ramping up to 15,000 tonnes annually in year seven,” he added.",{"type":574,"attrs":651,"content":652},{"textAlign":49},[653],{"text":654,"type":579},"The company is aiming to be a US based supplier of battery grade material and is first looking at serving specialist battery markets.",{"type":574,"attrs":656,"content":657},{"textAlign":49},[658],{"text":659,"type":579},"“Of the American-based EV and stationary-battery manufacturers to potentially address, the most exciting for us is the US government and defence sector. For example, U.S. Department of Defense (DoD) contractors are legally mandated to source their input materials from the US whenever and wherever possible — and there are numerous American Lithium-ion battery solutions providers for the DoD,” Baxter explained.",{"type":574,"attrs":661,"content":662},{"textAlign":49},[],{"type":574,"attrs":664,"content":665},{"textAlign":49},[666],{"text":667,"type":579},"The developments in the defence sector are just one example of surging global demand that is being underpinned by major expansions in the lithium ion battery industry that are underway worldwide as the sector matures from megawatt plants to gigawatt scale operations.",{"type":574,"attrs":669,"content":670},{"textAlign":49},[671],{"text":672,"type":579},"In Canada, an alliance of four graphite development companies – Elcora Advanced Materials, Northern Graphite, Nouveau Monde Mining Enterprises, and Metals of Africa – have partnered with Coulometrics to jointly acquire a spherical graphite mill with the goal of producing coated material “end to end in North America”.",{"type":574,"attrs":674,"content":675},{"textAlign":49},[676],{"text":677,"type":579},"The alliance is at an early stage and is seeking to have its material fully qualified by lithium ion battery producers.",{"type":574,"attrs":679,"content":680},{"textAlign":49},[681],{"text":682,"type":579},"Benchmark is tracking at least 12 lithium ion megafactories worldwide, seven of which are located in China and two in the US. By far the largest plant under construction is Tesla Motors’ Gigafactory 1 in Nevada – a $5bn investment set to reach its 35GWh cell capacity by 2020.",{"type":574,"attrs":684,"content":685},{"textAlign":49},[686],{"text":687,"type":579},"However, nearly 70% of new lithium ion battery demand for raw materials will be coming from China as the country’s major cell manufacturers, such as ATL and Lishen, expand their operations in a race to become the world’s lowest cost producer.",{"type":574,"attrs":689,"content":690},{"textAlign":49},[691],{"text":692,"type":579},"Investments in new lithium ion battery capacity out to 2020 are in excess of $15bn and rising according to Benchmark data.",{"type":574,"attrs":694,"content":695},{"textAlign":49},[696],{"text":697,"type":579},"This does not take into account the rumoured lithium ion megafactory being planned by Volkswagen AG (VW) which is expected to cost $11bn and be roughly twice the size of Tesla’s Gigafactory.",{"type":574,"attrs":699,"content":700},{"textAlign":49},[701],{"text":702,"type":579},"Should this rumour be substantiated in anyway by VW in the coming months, committed investments into expanding lithium ion battery capacity will rise well above $20bn over the next four years.",{"type":574,"attrs":704,"content":705},{"textAlign":49},[706],{"text":707,"type":579},"This is set to have a significant impact on demand for graphite anode material as cell manufacturers seek to lock up long term supplies of the material.",{"type":709,"attrs":710,"content":712},"heading",{"level":711,"textAlign":49},3,[713],{"text":714,"type":579}," Natural or synthetic?",{"type":574,"attrs":716,"content":717},{"textAlign":49},[718],{"text":719,"type":579},"Today, 65% of all battery anode material is sourced from natural spherical graphite, 33% from synthetic graphite material and the remaining 2% from other alternatives such as lithium titante, silicon and tin used in very small amounts in different technologies and testing of new anode formulas.",{"type":574,"attrs":721,"content":722},{"textAlign":49},[723],{"text":724,"type":579},"Analysing the consumption trends over the last 10 years, there is little doubt that battery consumers prefer naturally sourced graphite which is much lower cost to produce and has a lower environmental footprint than synthetic graphite.",{"type":574,"attrs":726,"content":727},{"textAlign":49},[728],{"text":729,"type":579},"However, consistency of supply remains a problem for the material as the feedstock flake graphite is sourced from multiple mines in China, each of which have different raw material ‘signatures’ – impurities that vary from mine to mine.",{"type":574,"attrs":731,"content":732},{"textAlign":49},[733],{"text":734,"type":579},"This makes it difficult for the end consumer to adapt to the changing raw material qualities.",{"type":574,"attrs":736,"content":737},{"textAlign":49},[738],{"text":739,"type":579},"With synthetic graphite, as it is man made from lower quality carbon raw materials such as petroleum coke and coal tar pitch, producers can offer a more consistent product albeit at a higher price, which can be up to three times that of coated, spherical graphite.",{"type":574,"attrs":741,"content":742},{"textAlign":49},[743],{"text":744,"type":579},"Synthetic graphite primarily supplies the steel industry with anode rods used to melt steel scrap.",{"type":574,"attrs":746,"content":747},{"textAlign":49},[748],{"text":749,"type":579},"These anodes, however, are very different to the lithium ion battery anodes in high demand. “Synthetic graphite faces a more complex problem to meet the growing demand,” explained Ontario Graphite CEO and former SGL vice president of Americas, Tom Burkett.",{"type":574,"attrs":751,"content":752},{"textAlign":49},[753],{"text":754,"type":579},"“Increases in capacity will require significant investment to meet the demand. As an example, SGL invested over €250m ($277m) to install an electrode plant in Malaysia” Burkett told Benchmark in an interview.",{"type":574,"attrs":756,"content":757},{"textAlign":49},[758],{"text":759,"type":579},"“This plant has an annual capacity of 40-50,000 tonnes of synthetic graphite. Using this as a single point guide, investment to install 100,000 tonnes of new capacity in synthetic anode materials could require an investment of €400-500m ($443554m),” he added.",{"type":574,"attrs":761,"content":762},{"textAlign":49},[763],{"text":764,"type":579},"Burkett also explained that converting an anode plant into a speciality plant for batteries is not a straight forward task. In one example given, a major synthetic graphite producer spent $50m attempting to covert its steel anode plant into a speciality operation. The plan did not work and it resulted in a $50m write-off.",{"type":574,"attrs":766,"content":767},{"textAlign":49},[768],{"text":769,"type":579},"While synthetic graphite challenges appear greater than natural, it is important to note that synthetic still commands a third of the anode market and provides consistent, higher quality material to the market. Something natural graphite has struggled to do.",{"type":574,"attrs":771,"content":772},{"textAlign":49},[773],{"text":774,"type":579},"In Q2 synthetic expansion, Japan’s SDK has increased its battery anode production capacity from 1,000 to 1,500 tpa showing rising demand for all battery anode materials regardless of provenance.",{"type":709,"attrs":776,"content":777},{"level":711,"textAlign":49},[778],{"text":779,"type":579}," Prices to follow lithium?",{"type":574,"attrs":781,"content":782},{"textAlign":49},[783],{"text":784,"type":579},"While lithium prices are experiencing their strongest ever surge, graphite has lagged behind.",{"type":574,"attrs":786,"content":787},{"textAlign":49},[788],{"text":789,"type":579},"Flake graphite – the feedstock source for spherical graphite – is seeing limited upward pressure after being weighed down by a lack of demand in the steel sector, its primary market.",{"type":574,"attrs":791,"content":792},{"textAlign":49},[],{"type":574,"attrs":794,"content":795},{"textAlign":49},[796],{"text":797,"type":579},"However, new price data from Benchmark has started to show rising prices for uncoated spherical graphite, 99.95% C, 15 micron in size, on a FOB China basis.",{"type":574,"attrs":799,"content":800},{"textAlign":49},[801],{"text":802,"type":579},"Price ranges in the market have risen from $2,500 to $3,000/tonne in Q4 2015, to $2,800 to $3,200/tonne in Q2 2016.",{"type":574,"attrs":804,"content":805},{"textAlign":49},[806],{"text":807,"type":579},"Benchmark’s uncoated spherical graphite prices reflect the range of products seen on the market. As each product is milled and purified to a customer’s specification, there is not one single traded price for spherical graphite.",{"type":574,"attrs":809,"content":810},{"textAlign":49},[811],{"text":812,"type":579},"For example, the particle sizes of battery anode material can vary from 12 micron to 25 micron while raw material quality issues with some flake sourced in China means not all product can be used by the major consumers.",{"type":574,"attrs":814,"content":815},{"textAlign":49},[816],{"text":817,"type":579},"Benchmark has even heard some new requests for a finer, 5 micron sized product for battery anode consumption, an example of how much the battery-grade specification can vary.",{"type":574,"attrs":819,"content":820},{"textAlign":49},[821],{"text":822,"type":579},"It will take some growth in the battery market – which is presently the second largest for natural flake graphite in the derivative spherical form – before it begins to have a meaningful impact on the flake concentrate price. At present, the steel industry, especially in China and the US are far more influential factors.",{"type":574,"attrs":824,"content":825},{"textAlign":49},[826],{"text":827,"type":579},"Analysing the price trends of each graphite product over the last two years, graphite is split into a two tier market. While nearly all grades of flake graphite concentrate and value added products have fallen between April 2014 and 2016, there is a marked percentage difference.",{"type":574,"attrs":829,"content":830},{"textAlign":49},[831],{"text":832,"type":579},"For example, flake graphite concentrates of -100 mesh, +100 mesh and +80 mesh, all with a purity of 94-95% C have fallen in excess of 30%. Value added, or derivative products, however, have seen a much softer landing with price decreases ranging from 5% to 17% and, in the case of expandable graphite, average price increases of 10%.",{"type":574,"attrs":834,"content":835},{"textAlign":49},[836],{"text":837,"type":579},"These price movements demonstrate the complexity of the graphite market and its downstream products, all of which serve different end uses with their own supply and demand dynamics. However, they are also still impacted by the wider raw material trends with 66% of flake graphite being sourced in China.",{"type":574,"attrs":839,"content":840},{"textAlign":49},[841],{"text":842,"type":579},"While steel is still the main driver for flake graphite concentrate demand, markets such as batteries for spherical graphite and flame retardant materials for expandable graphite are showing strong growth prospects.",{"type":574,"attrs":844,"content":845},{"textAlign":49},[846],{"text":847,"type":579},"However, the sourcing of the precursor flake material is still dictated by the fortunes of the global steel industry.",{"type":574,"attrs":849,"content":850},{"textAlign":49},[851],{"text":852,"type":579},"It is a sector which has suffered even more at the beginning of Q2 after China dumped excess steel supply onto the global market at a cut price of 30%. Developments like this are evidence of a structural problem with the steel market and a recalibration is underway to a lower demand equilibrium.",{"type":574,"attrs":854,"content":855},{"textAlign":49},[856],{"text":857,"type":579},"This means demand for graphite in this sector is likely to be flat for some years to come forcing flake concentrate suppliers, especially those outside of China, to focus on specialist grades.",{"type":574,"attrs":859,"content":860},{"textAlign":49},[861],{"text":862,"type":579},"However, should the battery market grow as expected and consumption parameters remain at today’s levels, Benchmark forecasts the sector will overtake refractories as the number one market for flake graphite before 2020.",{"type":574,"attrs":864,"content":865},{"textAlign":49},[866],{"text":867,"type":579},"And once batteries become the number one market, graphite would begin to see similar price fluctuations to the lithium industry.",[869],{"slug":562,"name":563,"content":870},{"job_title":565,"image":871,"bio":568,"linkedin":569},{"filename":567},"\u003C!--#storyblok#{\"name\": \"article\", \"space\": \"\", \"uid\": \"c4c4e27c-a014-4c81-879c-29ce096ee0af\", \"id\": \"\"}-->","article",[875,878,881],{"slug":876,"name":877},"batteries","Batteries",{"slug":879,"name":880},"critical-minerals","Critical Minerals",{"slug":882,"name":883},"graphite","Graphite","private",{"id":49,"alt":886,"name":886,"focus":886,"title":886,"source":886,"filename":887,"copyright":886,"fieldtype":888,"meta_data":889,"is_external_url":51},"","https://a.storyblok.com/f/287943243085208/3df7c849d5/bm-screen-shot-2016-07-21-at-191259.png","asset",{"alt":886,"title":886,"source":886,"copyright":886},"Jul 21, 2016","21st July 2016",[],[],1792773947324]