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Automakers, EV battery companies scramble for North American graphite

Reduced Chinese exports are forcing companies to find domestic sources of graphite for their EV battery anodes.

 

 

February 16, 2024 01:05 PMUPDATED 5 HOURS AGO

JOHN IRWIN   

 

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REUTERS

Graphite is the main component in a lithium ion battery’s anode, and can frequently account for more mass in the battery than other materials such as lithium or cobalt.

The race to secure graphite is on in North America, as EV battery manufacturers and automakers scramble to secure access to the material, a crucial ingredient for lithium ion battery production.

At least three major deals were struck over the past several days between auto companies and producers of graphite. General Motors said on Feb. 15 it entered into an agreement with a Canadian miner to receive 18,000 metric tons a year of active anode material, made mostly out of graphite.

On Feb. 12, South Korean EV battery maker SK On, whose customers include Ford, Hyundai and Volkswagen, entered into an agreement with Colorado graphite producer Westwater Resources to receive 34,000 tons of the material, while Panasonic Energy on Feb. 9 entered into an agreement with an Australian company to receive at least 10,000 tons of graphite for its North American operations.

The agreements come as the industry rushes to secure the raw materials needed to meet their EV targets in the coming years — and to secure enough regional supply to meet Inflation Reduction Act requirements for EV incentives.

Rapid growth

Graphite is the main component in a lithium ion battery's anode, and can frequently account for more mass in the battery than other materials such as lithium or cobalt. According to Benchmark Mineral Intelligence, about 95 percent of all EV battery anodes are made from graphite.

 

The market for the material is set to balloon. According to S&P Global, worldwide demand for anode-active materials, comprised mostly of graphite, for EV batteries was 790 kilotons in 2023, a figure that's set to rise to 3,100 kilotons by 2030.

Demand will grow at an even faster rate in North America, to 620 kilotons in 2030 from 56 kilotons last year.

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"The growth rate in North America moving forward is much higher because, at the moment, the battery industries in the U.S. and Canada are quite small," said Ali Adim, senior technical research analyst at S&P Global Mobility. "But they are expected to undergo a really rapid expansion in the next six years thanks to incentives such as IRA."

Deflating China's role

The Inflation Reducation Act's EV incentive provisions are geared toward boosting the regional supply chain for EVs and EV parts and intended to steer companies away from importing products from countries including China. Under the act's rules, new EVs are ineligible for tax credits if any of its battery components are made by a "foreign entity of concern" such as China, Iran, North Korea or Russia.

Considering China's dominance in EV materials, that poses an issue for EV manufacturers. According to the Alliance for Automotive Innovation, China controls about 90 percent of global anode production capacity and converts about 90 percent of the world's graphite into anode material. According to the U.S. Geological Survey, China produced about 65 percent of the world's graphite in 2022.

But in December, China restricted some of its graphite exports, causing Western companies to look elsewhere for the material, which can be found around the world or made artificially.

Natural graphite

Commercial-scale North American graphite production is virtually nonexistent, but mining companies and graphite producers are looking to change that. And North American manufacturers are looking to secure domestic sources of graphite as quickly as possible.

SK On said its agreement with Westwater will source graphite from Westwater's new operations in Kellyton, Ala., near a graphite deposit that Westwater has the mineral rights to that sits on 42,000 acres, or nearly the size of Washington, D.C. (43,740 acres).

GM's agreement with Canadian miner Nouveau Monde Graphite will provide the automaker with 18,000 metric tons of refined graphite from the miner's battery plant in Bcancour, Quebec. In return, GM agreed to invest $150 million to support production there.

"Our collaboration with NMG is a milestone for the industry, and in our ongoing development of a more sustainable and resilient battery supply chain," Jeff Morrison, GM vice president of global purchasing and supply chain, said in a statement. "From our assembly plants and battery cell plants in the U.S., to our investments across the supply chain, we are developing a North American EV ecosystem, which benefits consumers, expands economic opportunity and creates a competitive advantage for GM."

That deal underscores the speed companies will need to move to secure supplies of natural graphite in North America. Between the GM agreement and a previously announced agreement between NMG and Panasonic, about 85 percent of NMG's planned capacity at the Quebec plant is already accounted for.

Synthetic sources

Companies could also turn to synthetic graphite. Panasonic did just that this month when it entered into an agreement with battery materials supplier Novonix to source at least 10,000 tons of synthetic graphite made at Novonix's plant in Chattanooga over four years beginning in 2025.

The Chattanooga plant is scheduled to begin producing synthetic graphite in late 2024 and will be the first large-scale site to create the material in North America. The company expects to scale up to about 20,000 tons of the material per year.

Today, about 77 percent of the graphite used in EV batteries comes from synthetic sources, according to S&P Global. But many emerging players are focusing on natural graphite, S&P Global's Adim said.

"Partly this is due to the fact that natural graphite requires less energy to be processed, and as a result, it has a lower carbon footprint and cost of production," he said.

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But producing synthetic graphite typically takes up to 30 days and requires extremely high-temperature furnaces, resulting in high energy consumption and carbon emissions. Novonix, however, said it has developed a system that can cut production down to around three days.

Innovations such as those could be appealing for battery manufacturers looking to make their products more efficient, since synthetic graphite generally outperforms natural graphite in an EV battery.

"As natural graphite is extracted from the ground, it contains impurities and irregular crystal structures that result in poorer performance, especially when it comes to durability and cycle life," Adim said.

As companies look to shore up their regional supply chains, the U.S. industry can expect more partnerships between EV battery makers and graphite producers.

"We will continue seeking partnerships with promising battery material companies in the region," said Park Jong-jin, SK On vice president of strategic purchasing