China’s Putailai to build anode factory in Sweden

Putailai, one of the major anode producers in China, announced plans to invest $1.5 billion (SEK 15.7 billion) in Zichen Technology (Sweden) AB. to build Europe’s largest factory for anode manufacturing in Sundsvall in central Sweden

The new facility will offer the opportunity to leverage the country’s abundant green electricity, according to the company’s announcement in early May.

The project aimed at an annual capacity of 100,000 tonnes of anode materials with a maximum investment of $1.5 billion.

This could be one move among many others to build battery raw materials supply chains in major markets outside China such as Europe, the US, and so on.

“Europe and other overseas markets are an important part of the global demand for new energy vehicles. We decide to set up the facility to better meet the downstream demand in the region,” the company said.

While the graphite price has been experiencing a downtrend, market participants mostly hold positive views toward the long-term development of graphite anode and its localization in regions outside China given original equipment manufacturers’ (OEMs’) needs to diversify sources of raw materials and geopolitical factors, as well as ESG concerns, according to delegates attending Fastmarkets’ Asian Battery Materials Conference from May 1-3.

Fastmarkets’ weekly price assessment for graphite flake 94% C, -100 mesh, fob China stood at $670-720 per tonne on Thursday May 12, down by 16.26% since the start of the year.

Meanwhile, Fastmarkets’ price assessment for graphite spherical 99.95% C, 15 microns, fob China was assessed at $2200-2500 per tonne on the same day, down by 11.32% from the start of 2023.

“I think we’ll have it right when you talk about the calm before the storm. While the graphite price has been experiencing a downtrend in the past couple of months, it’s just a cyclical phenomenon,” David Christensen, chief executive officer at Renascor said. “And part of the weakness is because of significant investment in the midstream production capacity, but it hasn’t been matched by the upstream development.”

“And I think what we’re seeing with the graphite space right now is we all look at a medium-term and a long-term outlook as particularly rosy, but we’re in an immediate term where the price is low,” Christensen added.

Meanwhile, optimistic expectations for long-term demand from lithium-ion batteries and geopolitical factors such as IRA legislation in the US indicate that industry participants globally tend to seek diversified supply sources of graphite raw materials, according to sources.

“Graphite supply is highly concentrated in China. There is significant need for diversification and localization of graphite supply in North America and Europe as those industries build lag. We forecast though that there will be rising demand for natural graphite usage reflecting and that reflects really cost considerations and ESG considerations,” said Will Adams, head of base metals and battery research at Fastmarkets.

Fastmarkets research assessed that around 90 projects would bring about more than three million tonnes of new natural graphite capacity between now and 2033.

Elsewhere, on the anode side, based on capacity announcements to date, Fastmarkets’ research team expect the new country entrants to the market by 2025 to include the US, Canada, Australia, Finland, France, Germany, Norway, Poland and Sweden.

Challenges ahead for new supply chains

While the outlook for lithium-ion batteries remains positive for most market participants, it is undeniable that the construction of new supply chains is facing multiple challenges, according to sources.

At the outset, there is the financing required for facility construction.

“I think there would be a supply gap for graphite if you take IRA compliance into consideration,” Vikram Handa, managing director of Epsilon Carbon said during a graphite panel.

“We are looking at building an anode project in the US. It’s a large capex and it takes anywhere 18-20 months to build this facility out after permitting,” Handa added.

Junior mining companies face significantly stiffer challenges to get better financing such as equity or debt financing, according to Christensen. “What we found is that by moving downstream, we could attract a more bankable customer base,” Christensen added,

Furthermore, there are ESG concerns and technological challenges for meeting demand from downstream cell makers.

“And I think there’s a challenge there of having deep knowledge of what is the performance of the cell and what are the parameters that give you that higher capacity or quick charge which we have developed in house,” Handa said. “But today customers want both. Customers are quite demanding, and customers also want customized products.”

As far as ESG is concerned, producers outside China are seeking new ways to realize low-carbon footprint, which could constitute one advantage for products outside China considering relatively higher costs.

Epsilon, an India-based anode producer, said that they are using the thermal method for the purification and graphitization of anode materials while Renascor, an Australia-based spherical graphite producer, mentioned the hydrofluoric (“HF”) acid-free purification process, which results in eco-friendly production.

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