China caused a stir a week ago when it announced plans to curb on exports of certain graphite materials and related products from December to safeguard the country's national security and interests.

The West was quick to frame this as another attack in the geopolitical battle for critical minerals supply, particularly those required for the energy transition and the lithium-ion batteries that figure heavily in that process through the medium term.

While much of the geopolitical rhetoric has focused on China's dominant position in the transformation of lithium carbonate and hydroxide into battery cathode chemicals and therefore, a need to develop supply chains for such chemicals outside China, a similar situation for graphite and the natural flake, spherical natural graphite flakes and battery anode material has largely gone unnoticed, until now.

Aside from the announcement, little detail has emerged as to what will actually happen come December.

"China says it will control the export of graphite and graphite materials. That means that in the future if a company in China is producing graphite or graphite anode materials, it will have to apply for a license or permit from the Chinese government to export the materials. This means that the material will not be freely exported anymore," Northern Graphite chief executive Hugues Jacquemin told Mining Journal.

Key questions Jacquemin wants answered are how the export licenses will be provided, to whom and in what kind of quantities.

"Many OEMs producing batteries in Europe and the US are sourcing material mostly from China because there's no other place to source it from. One of the big questions is what happens to existing agreements. Are those going to be honoured?" said Jacquemin.

Could boost graphite producers in North America

The announcement will boost North America's graphite developers, such as Northern Graphite, Nouveau Monde Graphite and Graphite One, which, to a certain extent, have been ignored by investors who thirst for battery minerals and have faced challenges to raising finance to advance their projects. Each company plans downstream processing to transform their graphite feedstock into battery anode material.

Following the announcement from China, shares in Northern Graphite, Noveau Monde Graphite, Graphite One, and Focus Graphite  all spiked, but have since fallen back.

With no other sources of battery-grade graphite anode material available outside China since the announcement, Jacquemin has received calls from OEMs, investors and others asking whether the company can speed up its plans. These include restarting production from Okanjande  in Namibia and building an anode materials plant in Baie Comeau in Quebec, Canada.

"If you're building a battery factory and you don't have another supply, suddenly people ask how can we speed this up? How can they get product in 2025 or 2026? Until last Friday, yes, people were looking for graphite, but now, the sense of urgency is there," said Jacquemin.

Jacquemin believes that ultimately, OEMs and battery manufacturers will step in and form strategic joint ventures with graphite developers like Northern Graphite to help finance graphite deposits and processing operations into production. With graphite deposits in Quebec, Namibia and Ontario, Northern Graphite aims to produce 300,000tpa of graphite materials.

"The intent from all the stakeholders is to create the demand and the supply for the material. It starts with the OEMs deciding to build electric vehicles; the electric vehicles need the batteries, and then they need the minerals for the batteries. To close the circle, we have to be able to offer it all. We are producing the raw material today, so we are in a good space, but we still have to be able to process the material. Who can we partner with outside of China to process the material immediately, and what is the cost of that?" said Jacquemin.

Graphite processing to produce anode material is less complex than lithium processing for the cathode. However, the client specifications are equally exacting to obtain the battery performance required.

"For graphite to perform in a battery, it has to have certain characteristics. You can find technologies based on what the Chinese have used for many years but are more efficient. A lot of it is off the shelf. Where it becomes more complicated is how you put it together. You can mill and shape natural graphite to go in the battery with different size distributions. Depending on the chemistry on the cathode side and the performance you want out of the battery, you will vary the size of the graphite material. Once you've sized the material, you must purify it chemically or thermally to give it different properties. And then for graphite to function in the battery, you have to coat it," said Jacquemin.

China restricting exports 

In some respects, China's action is nothing new. For the past 20 years, China has imposed export quotas and controlled exports of industrial minerals through a mineral export license system. This was primarily explained as a move to control supply and, therefore, obtain higher pricing for its minerals exports. While there is truth to this, at other times, it was often preceded by China flooding the market for various industrial minerals to put competing Western production out of business.

The trajectory of China's growth in graphite's dominance mirrors that of lithium, as does the West's response. China grew its battery capacity when the West either wasn't interested or was happy to rely on imports from China. China developed its graphite and lithium capability to feed its nascent and growing battery industry. Then, suddenly, the West woke up and saw this as a strategic vulnerability.

"China built processing capacity because it needed the processing capacity to develop it own battery industry. Europe and North America only started producing batteries a few years ago," said Jacquemin.

The timing of this latest action suggests it is in some way a retaliatory action for the USA and European Union ramping up the minerals supply war. Graphite has many different usages, including in military applications.

While China dominates graphite processing (80% of world capacity) and is a large miner of graphite (60% of world production), it is also an importer of graphite feedstock. This could spur Chinese companies on another scramble to secure graphite resources worldwide, as they have done in the lithium space. Several Australian and Canadian juniors have graphite exploration projects in Africa, Brazil and elsewhere.