Graphite is the most stable form of carbon, providing attractive properties for modern batteries and other high-tech applications.
Graphite prices are up 25 to 30 per cent in the last couple of months, which has been ascribed to reductions in domestic Chinese supply, as well as continued and strong demand from the lithium-ion battery industry.
Industry experts believe that this may be the first real sign that growth in battery production is translating to higher graphite prices, as it has to higher lithium and cobalt prices. This is unsurprising, given that a lithium-ion battery utilizes roughly twice the amount of graphite than lithium carbonate; for example, the lithium battery in a full electric Nissan Leaf car contains nearly 40 kg of graphite.
In fact, graphite is the biggest raw material by volume going into lithium-ion batteries.
Graphite is also used extensively in other applications, such as in refractories, steelmaking, foundry facings, lubricants, and pencils.
Whilst much of the news media about the battery industry has focused on high profile battery factories in western nations (such as Tesla’s gigafactory), Roskill (a metals and minerals research firm) believes that the lithium-ion battery supply chain will be dominated by China.
Indeed, Chinese firms are planning to deliver an almost threefold increase in global graphite processing capacity by 2020, in order to meet the growing demand from the lithium-ion battery industry.
Traditionally the use of graphite has been split between natural flake graphite, and the more expensive synthetic graphite. According to Canaccord Genuity Group Inc, a financial services firm, around 60 percent of the graphite used in lithium-ion batteries is synthetic, and a potential switch to greater use of natural graphite represents a “significant opportunity”.
Canaccord estimates that if natural graphite can reach that 60 percent market penetration level, we could see an increase in demand for natural graphite of over 660% percent by 2025.
Writing in The Australian newspaper, Robert Gottliebsen has stated “not since the development of oxygen steel furnaces, which revolutionised steel production, have we seen anything like the current global battery boom.”
The boom in steel furnaces was a windfall for Australia, and it is looking like we are once again well placed to capitalise on the next commodity boom.