China's export ban on graphite boosts opportunities for non-Chinese graphite producers

Company News

by Peter Milios

In October last year, China announced new export permit requirements for certain graphite products, citing national security concerns and aiming to bolster its control over critical mineral supply amid challenges to its manufacturing dominance.

China is utilising its dominant position in the global critical minerals and raw materials supply chain to address the expanded economic security policies in Western nations. This threatens foreign manufacturers, especially in the US, which relies heavily on imported anode materials.

As the leading graphite producer and exporter worldwide, China refines over 90 percent of the global graphite supply.

This dominance holds significant influence in the manufacturing of electric vehicle (EV) batteries, where graphite serves as a crucial component for anodes, the negatively charged part of the battery.

As a result, in December, natural graphite and synthetic graphite shipments from China slumped 91% and 28% respectively.

Following China’s actions, we have started to see companies sourcing both natural and synthetic graphite from non-China producers.

On February 9, 2024, NOVONIX (NASDAQ:NVX, ASX:NVX) signed a binding off-take agreement with Panasonic Energy, committing to supply at least 10,000 tonnes of high-performance synthetic graphite anode material from NOVONIX's Riverside facility in Chattanooga, Tennessee, to Panasonic's North American operations between 2025 and 2028.

This collaboration supports Panasonic Energy's aim to expand EV battery production in North America, boost local material procurement, and reduce the carbon footprint of its lithium-ion battery supply chain for EVs by 50% by 2031 compared to 2022 levels, leveraging incentives under the Inflation Reduction Act, including the Section 45X Advanced Manufacturing Production Credit, benefiting NOVONIX and Panasonic Energy's North American plants.

Following this, another significant deal emerged overnight.

Nouveau Monde Graphite (TSXV: NOU; NYSE: NMG) inked multi-year offtake agreements with General Motors (NYSE: GM) and Panasonic Holdings, each committing to purchase 18,000 tonnes of active anode material annually for six to seven years and investing US$25 million in the Quebec-based miner.

This move aims to establish Nouveau Monde as North America’s premier source of natural graphite active anode material for electric vehicle (EV) batteries, backed by total investments of US$87.5 million, including contributions from Pallinghurst Resources and Mitsui & Co., to foster a local and traceable value chain for the EV market in North America.

These strategic agreements mark a pivotal step towards establishing a more resilient and sustainable electric vehicle supply chain in North America, ensuring greater independence and stability in the face of global market dynamics.

Peter Milios

Peter Milios is a recent graduate from the University of Technology - majoring in Finance and Accounting. Peter is currently working under equity research analyst Di Brookman for Corporate Connect Research.

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