Despite some discussions regarding changes to the battery chemistry, experts predict that we will see a surging graphite demand as graphite will remain a dominant element for electric vehicles or EV batteries and lithium ion batteries, at least for the next decade. The demand incorporates both natural and synthetic graphite. According to the International Energy Agency (IEA) the electric vehicle and low-carbon energy sectors will demand 25 times more graphite per year by 2040, when compared to today. However, there are certain concerns regarding graphite demand and supply chains and if it could affect the pace of EV battery adoption.
The global graphite market is divided depending upon region, type and application with a further division of natural and synthetic graphite. Not all natural graphite are the same which is why there is a specific graphite anode material that is necessary for the EV industry.
Graphite has always played a role in the automotive industry being used for gaskets, brake linings but has recently seen a growing importance as a critical mineral for EV lithium battery anodes with no current substitutes. There is no shortage of graphite deposits, but it is tighter when it comes to the supply of battery grade graphite. EV demand is set to increase and any delays in securing the required materials to meet the battery demand will result in a delay in the global green drive and an overall energy transition.
As of mid-2023 there are a number of factors that are challenging the global graphite market including the increasing cost of electricity and power shortages. This adversely affects the supply of natural graphite while synthetic graphite manufacturing is a highly power-intensive process, again adversely affected by the rising cost of power. The supply chain of container and bulk shipping had previously been affected by the global pandemic lockdowns and restrictions, with many vessels and ports not operating at full efficiency. This resulted in less deliveries and longer waiting times which affected the anode market.
Today the global supply chain is further disrupted by the Ukraine crisis making shipping logistics even more difficult to negotiate. If the supply of natural graphite anode material is affected then manufacturers will have to turn to synthetic graphite more and more, which will affect production and increase prices.
The issue with the supply of graphite has nothing to do with a shortage of natural graphite but instead with the graphite producer and mining projects. Grading and pricing have become an issue with just a few projects with a high enough grade to sell above their production costs. The higher production costs of course in turn lead to higher graphite prices in the market.
According to a comment by a primary analyst at Wood Mackenzie graphite is not scarce, but the deposits for battery grade graphite used as raw material for electric vehicle production, is tighter.
Despite the tighter supply of battery grade graphite, overall the natural graphite market has the capacity to exceed current demands and is projected to continue to do so in the future. Being the preferred battery anode material for rechargeable and EV battery segments, the demand is estimated to continue to increase.
As one of the world’s most versatile manufacturing materials, playing a crucial role in many modern industries, graphite is projected to have a continuous explosive market growth. The World Bank predicts that graphite demand will increase by 500% between 2018 and 2050, with an emphasis on the electric vehicle industry.