Another mineral deficiency is looming. According to the International Energy Agency (IEA), demand for graphite may reach 10 million tonnes by 2030, mainly driven by electric vehicle (EV) and energy storage needs (60%). 93% of current refined, battery-grade graphite is sourced from China, while only 1% is processed in the US. If this demand materializes, graphite supply will probably follow a similar trend to the impending copper famine.
Graphite’s critical nature
Graphite currently acts as a primary anode material in a lithium-ion battery cell, accounting for more than 95% of the anode material, both as natural and synthetic material. It’s also critical for other parts of the energy infrastructure such as steelmaking, refractories and data centers.
Synthetic graphite can supply the needed volume, but natural deposits are better suited for cheaper, more diverse, and less energy-intensive sources. This presents an even bigger challenge for the US due to its limited mining and processing output, thus increasing supply risks to critical industries.
The graphite challenge is both geological and technological. Innovations in processing and recycling are transforming how producers shift from purely extraction activities to becoming system integrators who meet OEMs’ carbon and sourcing requirements.
Why should mining companies explore graphite processing?
Strategic risk is clearly shifting from resource availability to midstream conversion capacity. In Australia, this risk is being re-evaluated through policy, with the Department of Commerce announcing duties of 93.5% on Chinese anode-grade graphite, which strengthens the case for Australian-based domestic capacity – similar to the value capture seen in lithium and copper refining.
The advantage for mining companies is that they can profit by partnering with cell manufacturers since they already possess the expertise in scaling, permitting, and operating the midstream infrastructure needed to deliver battery-grade material. Furthermore, with major global mining firms investing in recycling capacities for copper and lithium, there is an added advantage to include graphite since the feedstock is already available. For example, Rio Tinto acquired approximately a 20% stake in Sovereign Metals (Australia) to support its battery metals business and aims to expand its presence in battery metals.
Automakers and battery manufacturers are increasingly aligning their anode sourcing strategies with US trade thresholds. Unlike lithium or nickel, graphite is harder to substitute. As a result, downstream players, including GM, Ford, Tesla, Panasonic, SK On, and LG, are actively evaluating co-investments and offtakes to expand non-Chinese graphite-refining capacity.
Midstream innovation promises multiple opportunities
We believe that breakthrough innovation is happening in the graphite space, and that mining companies are missing the opportunities, given the downstream pull from OEMs. Recent breakthroughs include:
Purification
Battery anode makers typically require 99.9%+ carbon and tight control of impurities. Historically, hydro-fluoric acid (HF) has been used to remove silicates, but there’s a big push towards HF-free purification due to safety, permitting, and ESG constraints. Currently, a few HF-acid-free methods are being explored, namely: alkaline roasting, thermochemical roasting, plasma treatment and electrochemical purification:
- Nouveau Monde Graphite (NMG) is working on a breakthrough thermochemical purification technology.
- Syrah Technologies has partnered with DoE to expand its active anode material manufacturing facility in the US.
Graphite from recycling
Extracting graphite from spent EV anodes and industrial residues remains an ongoing challenge, as not all recycling companies recover graphite:
- Ascend Elements claims Hydro-to-Anode® can recover 99.9% pure graphite from recycled batteries; a Western alternative to China’s supply chokehold.
- American Battery Technology Company has developed an approach that starts with physically separating graphite from other battery materials like cathode metals, followed by a chemical purification step, and has secured a three year DoE development grant.
Modular midstream processing
Deployment of shared pilot-scale plants for purification and extraction. Urbix (Arizona-based) announced selection to enter negotiations for up to $125M in DOE funding toward a commercial-scale graphite processing facility.
Where to from here?
The graphite challenge marks a fundamental shift in capturing value in the battery metals supply chain. Companies that establish graphite processing capacity early will secure premium pricing and long-term offtake agreements. Those that remain purely extractors will find themselves in an increasingly commoditized segment, dependent on Chinese supply and vulnerable to policy shifts.
