It will get more expensive. China is blocking the export of valuable raw material
China is a country that produces the most graphite. The decision of its government to limit the export of this raw material can realistically affect the market situation. Especially considering that we're talking about a material that is essential for the production of typical batteries used in electric cars among other things. Not least because of the increase in popularity of such vehicles, the demand is constantly increasing.
11:51 PM EDT, October 24, 2023
The export limitation specifically means that from December 1, 2023, every exporter of natural and synthetic graphite will have to apply for permits (which may not necessarily be granted to them). Similarly, starting from August 1, the situation with the export of gallium and germanium - metals playing a significant role in the production of semiconductors - looks the same. Both of these decisions are officially justified by concern for national security.
Euronews Service regards the Chinese authorities' decision as part of the ongoing trade war that has been raging for several months, which is being conducted by the Middle Kingdom with the United States and the European Union. In recent rounds, the U.S. has tightened control over semiconductor exports to China and suspended the sale of more advanced artificial intelligence chips, while the EU openly speaks of plans to impose tariffs on electric vehicles produced in China.
China is limiting graphite exports. A blow to the USA and EU
China is the world's largest producer and exporter of graphite. Globally, they are also responsible for refining over 90 percent of graphite into a material used in practically all lithium-ion battery anodes for electric cars. The largest recipients of Chinese graphite include the United States, Japan, India, and South Korea, but there is also demand from European Union countries.
Graphite is classified as a critical raw material, among others by the European Union, the United States, and Japan. The International Energy Agency estimates that between 2020 and 2040, demand for this material will increase from 20 to even 25 times. This is primarily due to the increasing popularity of battery-powered devices, with particular emphasis on cars and other electric vehicles. However, graphite is also used in the aviation industry and the semiconductor sector.
Prices will rise - that's almost certain
Two scenarios are most likely, and they can occur in parallel. The first is a significant increase in the prices of batteries and products that use them (including electric cars). This will result from the need to find new, often more expensive suppliers. It's worth noting here that the largest natural resources of graphite are found in Turkey and Brazil. China takes third place, followed by Madagascar, Mozambique, and Tanzania.
The second scenario involves intensifying efforts to find a cost-effective and technologically advanced alternative to the currently used batteries. Although we regularly hear about new ideas for these components, so far none have achieved commercial success.
