Graphite Worldwide

Worldwide demand & supply

Growing demand for graphite

  • Stable demand from conventional steel industry, 35%+ of total demand
  • Increasing demand for high quality, large flake graphite

    – Lithium batteries Electric cars, hybrids cars, consumer electronics

    – Fuel cells

    – Pebble bed in nuclear reactors

Graphite demand has been growing at 5% annual rate over the past decade in response to growing demand from emerging economies as well as a number of green initiatives, including: lithium-ion battery; fuel cells; solar panels; and nuclear energy. Many of these applications are still under development, and the growth rate is expected to increase as they are commercialized. Industry experts expect the surging demand for graphite will outpace the current level of supply in the next a few years (despite some short-term choppiness in prices). Thus, high-quality, large vein deposits, is in a unique position to fill the demand required by the market.

Supply

  • Major graphite producers include China, India, Brazil, North Korea, Canada, Mexico, and Sri Lanka
  • China supplies ~75% of graphite production but China’s supply is expected to decline due to:

    – Export licenses, value-added taxes, and export taxes are imposed

    – Increasing domestic demand

    – Low cost deposits being depleted

    – Tightening environmental regulations

China Story

  • China has the world’s largest graphite reserves (55,000 tonnes) and accounts for ~75% of the world’s known reserves (USGS, 2012)
  • Majority of the suppliers are small-scale, low cost, mines
  • China is aiming to shift from low value raw material exports to production of value added material
  • Raw material supply is declining

    – Tightening mining regulations – environmental measures are implemented

    – Government-back consolidations are taking place

    – Less favorable export tax regime – 20% export tax and 17% VAT

    – Increasing domestic demand for battery grade material, as China is the largest consumer of lithium

China currently dominates the graphite supply, with ~75% of total production worldwide in 2011, according to Industrial Minerals. The country’s supply accounts for 90% of global amorphous production and 60% of flake production. The bulk of China’s supply comes from small scale producers, whose low cost and environmentally unfriendly operation methods are unsustainable elsewhere in the world.

Recently, the government recognized graphite as a strategic mineral resource and aimed to shift the graphite industry from low value raw material exports to specialized value added products. The government had issued a new set of rules for graphite mining, outlining higher requirements for reserve size and environmental protection. Outdated small mines are being shut down and a government-backed consolidation program has been put into place. According to Industrial Minerals, as many as 190 graphite mines had been closed on environmental and resource-protection grounds in the prolific Lutang mine district in 2011. Production of amorphous fell from 600,000 tpa to a capped 510,000 tpa after the consolidation.

In 2008, China introduced a 20% graphite export tax and a 17% value added tax, along with an export licensing system. Meanwhile, the domestic demand remains strong. There is expected to be a limited supply from China for export markets.

Currently, China hosts more than half of the world’s top 12 graphite producing mines. The largest producers are Jixi Liumao Graphite Resource, Heilongjiang Aoyu Graphite, and Chenzhou Luteng Graphite, each with 70,000 – 80,000 tpa capacity. Many of these companies also operate spherical graphite plants, which produce battery grade material.