Graphite mining firms are developing an integrated supply chain in Europe, in response to rising demand from electric vehicle (EV) manufacturers and EU concerns about critical mineral supply.
Much of the focus in the EV market remains on the lithium supply chain, but graphite is also significant for battery production. Historically, around 70pc has been mined in China, and close to 100pc of the anode precursor material used in lithium-ion batteries is processed there. China became a net importer of graphite in 2019, with the opening of Australia-based Syrah Resources' Balama mine in Mozambique in the second half of the year.
Natural graphite is produced in China and Africa at lower cost with higher energy capacity for batteries, while synthetic graphite produced elsewhere has higher production costs and lower capacity, but a longer cycle life. Producers of EV materials tend to use a blend of the two. Flake concentrate is processed into 99.95pc high-purity spherical graphite and fines suitable for battery manufacturing.
As EV sales continue to accelerate outside China, the world's largest market, demand for graphite supply outside of China is also increasing. The production of 1GWh of lithium-ion battery capacity requires 400t of graphite. Global natural graphite production amounts to around 750,000 t/yr, according to mine developer Northern Graphite, while long-term demand is expected to exceed supply. Chinese state-owned metals trading firm MinMetals forecasts a large natural graphite deficit in 2025.
Graphite mining developers are looking to reduce reliance on China, building plants in Europe to integrate the supply chain from mining through to anode production. Automotive manufacturers prefer to have suppliers in geographical proximity to meet just-in-time deliveries, which is driving the construction of large-scale lithium-ion EV battery plants in Europe. Locating anode plants in Europe further localises the supply chain.
The EU kept graphite on a critical raw materials list updated earlier this month, reflecting its importance in EV battery production. The EU imports 98pc of the graphite it uses, with 47pc imported from China, compared with a combined 10pc from Norway and Romania.
Europe's EV registrations approached 400,000 in January-June, up by 61.5pc on the year, data from the European Automobile Manufacturers' Association (ACEA) show, while petrol and diesel car registrations dropped by more than 45pc.
Plans to add 557 GWh/yr of battery manufacturing capacity in Europe by 2024 will require an additional 450,000 t/yr of anode material, according to Australia-based mining company Mineral Commodities.
Mineral Commodities is building an active anode material plant in Norway to supply European battery plants. The facility will initially produce 10,000 t/yr of coated spherical graphite and fines from flake supplied by its Skaland mine in Norway from 2023. It plans to add two 20,000 t/yr modules to process concentrate from its Munglinup mine in Australia when it begins output in 2024.
The plant will operate an alternative process to the typical hydrofluoric acid purification used in graphite refining, which has deterred production outside China because of its environmental impact.
Australia-based Talga Resources, which is focused on European graphite projects, is building a 19,000 t/yr coated anode plant in Sweden to supply the European EV manufacturing chain from 2023. The plant will process flake from the company's Vittangi mine in Sweden, which will produce 22,000 t/yr from 2021. Talga has revised up its resource estimate in response to increasing demand for graphite in batteries, with Europe the fastest-growing market, the company said.
Norwegian silicon and carbon producer Elkem is building a pilot plant to produce anode materials that is scheduled for completion in early 2021. The pilot will evaluate the viability of its large-scale plant project, Northern Recharge.
Graphite producers outside Europe are also targeting the market. Syrah Resources is assessing the feasibility of producing 10,000 t/yr of anode material at its plant in the US and scaling up to 40,000 t/yr. Syrah cites Europe as well as the US in its plans to provide an alternative to the Asian supply chain.
Australia-based EcoGraf is planning to become fully integrated, with its Epanko graphite mine in Tanzania due to produce 60,000 t/yr of flake, and an anode plant in Australia planned to start production at 5,000 t/yr, scaling up to 20,000 t/yr by 2022. EcoGraf said it is positioning to respond to the investment in European battery capacity, with the EU having committed €3.2bn to support supply chain development.
EcoGraf has qualified high-purity fines with European customers and signed a 10-year agreement with Germany's Thyssenkrupp Materials Trading. The agreement covers the sale of 50pc of planned output of purified spherical graphite and by-product fines from the plant. In the longer term, EcoGraf plans additional processing facilities in Europe and North America.
