Lack of investment, diversification biggest challenges for European graphite market

Investment for new projects outside of China and acceptance that synthetic graphite will continue to play a role in supplying the anode battery sector are key for the development of the nascent European graphite market, according to panelists at Fastmarkets’ European Battery Raw Materials conference in Amsterdam

Speaking at a panel covering the graphite supply and demand outlook, Mark Thompson, founder of battery anode maker Talga Group, argued that there is a learning curve that needs to happen in Europe while more acceptance of diverse sources of graphite supply also needs to be incentivized.

“There is reticence of using new sources of graphite supply compared with the old ones as original equipment manufacturers (OEMs) see it as risky and they are aware of the long qualification process for new material,” he said.

“The battery industry in Europe is just taking off and local demand for graphite sourcing is set to change as new gigafactories develop [in Europe], now companies have to secure their supply chains in accordance with the European Union’s Critical Raw Materials Act,” said clean energy consultancy Frontier Intelligence’s Peter Fox.

Graphite, which is used in the batteries of electric vehicles (EVs), is mostly sourced and processed in China at the moment into active anode material. Graphite is included in the EU’s Critical Raw Materials Act, released earlier this year by the European Commission, which set out new lists of the raw materials formally designated as strategic and critical for Europe.

Xavier Gillard, representative of the European Carbon and Graphite Association – also speaking on the panel – agreed that in Europe more acceptance of diverse sources of graphite supply is needed.

“On the regulatory side, synthetic graphite is a bit demonized by the European Commission because it is sourced from fossil fuels, and they [the European Commission] don’t like it,” Gillard said.

“But we still need synthetic graphite to compensate, at least for a while, for the lack of new natural graphite supply,” Gillard added.

There has been a massive increase in synthetic graphite production in China in recent years, which has led to a greater share split in favor of active anode material produced from synthetic graphite versus natural graphite in the domestic Chinese market.

“At the moment we are seeing 96% synthetic active anode material produced in China and our long-term projection is that certainly in Europe and North America we will see a more balanced split, around 50-50 split of active anode material from synthetic and natural graphite production.” Fastmarkets’ principal consultant Amy Bennett said during the conference.

The natural flake graphite market has been experiencing a tough period so far this year amid bearish demand and expanding capacity of synthetic graphite production in China.

Fastmarkets’ weekly price assessment for graphite flake 94% C, -100 mesh, fob China, was $530-606 per tonne on Thursday September 21, unchanged from the previous week but down by 31.57% from the beginning of this year.

Fastmarkets’ weekly price assessment for graphite spherical 99.95% C, 15 microns, fob China, was $2,000-2,200 per tonne on the same day, also unchanged week on week but down by 20.75% from the beginning of this year.

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