Market welcomes addition of synthetic graphite to EC’s Critical Raw Materials Act

European producers of synthetic graphite have welcomed the addition of the material into the European Commission’s Critical Raw Materials Act (CRMA) but they stress more needs to be done for the sector to compete with Chinese imports and meet the act’s goals

The EC has included synthetic graphite and aluminium to the list of strategic and critical raw materials outlined in the Critical Raw Materials Act, it said on Monday, November 13.

“The political agreement between the European Parliament and the Council includes that the list of critical and strategic raw materials will now become part of European Union law, and adds aluminium and synthetic graphite to the list,” the EC’s spokesperson told Fastmarkets on Tuesday.

“These raw materials have been identified given their strategic importance for green, digital, defence and space sectors and their forecasted increase in demand that will exceed the foreseeable supply,” the spokesperson added.

The European Carbon and Graphite Association (ECGA), which represents the continent’s carbon and graphite industry in Brussels, has lobbied for synthetic graphite to join natural graphite in the CRMA.

“We have been actively advocating for the recognition of synthetic graphite’s significance. Looking ahead, we are committed to collaborating with EU institutions and industry stakeholders to foster innovation, sustainable practices, and the development of a robust European graphite industry,” Corina Hebestreit, secretary general of the ECGA, told Fastmarkets on Tuesday.

Some members, while welcoming the move, have called for additional steps to develop the sector.

“Europe must adopt a clearer stance, akin to the regulatory protections and incentives found in North America and certain Asian countries, to truly secure local production of synthetic graphite,” Burkhard Straube, CEO of anode material producer Vianode, told Fastmarkets on Thursday.

Graphite is used in the batteries of electric vehicles (EVs) and at the moment is mostly processed into active anode material in China.

“The increasing demands of the EV and battery industry for sustainable, fast-charging, and long-range materials make synthetic graphite indispensable,” Straube said. “Europe needs to act decisively to foster local production that meets these stringent requirements and supports the green transition.”

The EU has lagged behind so far in its response to China’s dominance of the graphite supply market but this development will support the sector in Europe, according to Fastmarkets research analyst Georgi Georgiev.

Recent investment in China’s synthetic graphite production has seen that material take market share from natural graphite, which in turn has faced a gloomy period of extended bearish demand.

“We expect graphite demand in the European Union to exceed 500,000 tonnes by 2030 from the battery sector alone and half of this demand will be for synthetic graphite. Therefore, including synthetic graphite in the CRMA is an important step toward the development of a localized supply chain and reduce the EU’s dependency on imports of this critical raw material,” Georgiev said on Friday.

Sustainability drive

Inclusion in the CRMA aims to ensure the EU’s access to a secure, diversified, affordable supply of critical raw materials that are also more sustainable, the EC’s spokesperson said.

European producers of synthetic graphite have sought to significantly lower their carbon footprint in comparison to equivalent material produced in China, which relies on energy-intensive Acheson furnaces.

“Europe will therefore push for much more virtuous technology routes, based on advanced and innovative processes, which are able to reach CO2 footprints lower than 5kg CO2 per kg of battery anode material,” Laure Latour, spokesperson for carbon product producer Tokai Cobex Savoie, told Fastmarkets on Friday.

The inclusion of synthetic graphite into CRMA means Europe should recycle 25% and process 40% of its annual synthetic graphite needs by 2030.

“Setting goals for European processing and recycling of synthetic graphite is a step in the right direction, but they must be backed by substantial action and support,” Straube said. “Vianode is committed to playing a key role in establishing large-scale synthetic graphite production facilities in Europe and North America by 2030.”

But it will require further developments if these ambitious recycling and processing targets are to be realized.

“It requires robust and supportive framework conditions. Our recycling process for graphite anode materials shows promise, but scaling it successfully depends on Europe establishing an attractive and competitive environment,” Straube said.

The current low prices of graphite, availability of scrap and limited application for recycled material has hindered the development of a recycling sector, and also challenges meeting the 25% recycling goal, according to Latour.

“The recycling processes will also need to be adapted to take into account graphite recycling, where initially the focus was on nickel, cobalt and lithium,” she said. “In addition, graphite recycling outputs will have to be opened to applications other than electric vehicles to ensure that this recycling loop creates value for the recycling industry.”

Calls for legislative, regulatory overhaul

The addition of synthetic graphite to the CRMA also means the EC and member states identifying strategic projects that would benefit from more efficient permitting, according to Latour and Straube.

“The real test however lies in Europe’s willingness to overhaul its legislative and regulatory framework to make it as favorable to synthetic graphite production as the Inflation Reduction Act has done in North America,” Straube said. “Europe must create a competitive, supportive environment to not just attract, but also sustain and grow the synthetic graphite industry.”

Permitting is likely to become increasingly focused on technological developments to drive down carbon dioxide footprints of plans, according to Latour.

“The EC and member countries will take some more information on processes and the technological route before authorizing permits to make sure that energy performance and material yields are state of the art, in order to ensure the lowest CO2 footprint by process design, not relying only on low CO2 electricity grids,” she said.

As well, automakers and battery manufacturers on the continent will need to support their EU raw material suppliers if the synthetic graphite supply chain in Europe is to catch up with China’s, Latour said.

The political agreement between by the EC and the Council for the amendment to the CRMA is now subject to formal approval process.

The EC’s news follows China’s recent decision to impose export controls on several synthetic and natural graphite products.

China’s imposition of export controls has heightened the need for Europe to look closely at the resilience and diversification of its graphite supply chain, which at present is highly dependent on China, according to sources.

And came it in wake of ECGA launching a European strategic partnership to develop a sustainable and competitive supply chain for the domestic supply of carbon and graphite.

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