The latest salvo in the global commodities trade war has handed a boost to graphite share prices.
The Chinese government will restrict the export of graphite from December of this year.
Graphite is used in all current battery technologies as the anode material, alongside lithium and other battery metals for the cathode. The price reporting agency Fastmarkets forecasts battery graphite demand to reach 4Mt by 2033, four times its current level.
China is dominant in the graphite market, both in mining and processing, leading to increasing concern that the supply chain for batteries will need to absorb higher prices, in order to ensure access to non-Chinese graphite.
"Graphite prices are likely to rise, but China's latest move will also intensify the need to find alternative sources of this key battery material and push production out of China," Ewa Manthay, Commodities Strategist at ING, said.
China's graphite export restrictions are just a part of the global trend with several other countries having taken greater control of their resources," Manthay said. "Chile nationalised its lithium industry earlier this year, while Indonesia banned exports of nickel ore in 2020."
Boost for miners
The latest news of supply disruptions is boosting hopes for non-Chinese miners. The move has sparked optimism among graphite developers, who are hoping the news will push their projects ahead.
But operating graphite producers are also seeing a boon from the market tensions.
Tirupati Graphite, which is developing large flake graphite assets in Madagascar, said that it "expects the combination of increasing demand and supply shortfalls, alongside China's export restrictions, to have a positive impact on Graphite prices which have fallen since the start of 2023".
"Tirupati also expects that ex-China consumers of flake Graphite in energy transition sectors and others shall progress their efforts to secure ex-China supply sources for their flake Graphite needs to mitigate increasing geopolitical risk surrounding it and other critical minerals."
Other miners that are benefitting from graphite supply concerns are Syrah Resources, which operates the Balama graphite mine in Mozambique.
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