Analysts expect the demand for graphite to increase all over the world as more countries embrace electric vehicles as a greener form of transport.
Statista predicts that the global market value of graphite will increase to $18.2 billion in 2021 from $12.5 billion in 2016.
The major driver for increasing graphite demand is lithium-ion batteries that power electric vehicles.
Lithium-ion batteries are also used in smartphones, laptops, and other handheld electronic devices.
According to BNN Bloomberg, depending on the material used as the cathode, a lithium-ion battery requires up to 15 times more graphite than lithium.
The publication also notes that an electric vehicle like the Tesla Roadster uses 110 kilograms of graphite per vehicle.
Tesla chief executive officer stresses that graphite is even more important than lithium in its batteries:
“Our cells should be called Nickel-Graphite, because primarily the cathode is nickel and the anode side is graphite with silicon oxide… [there’s] a little bit of lithium in there, but it’s like the salt on the salad.”
Currently, China is the leading exporter of graphite, but the output from the country is declining since the government shut down industries to reduce pollution.
Considering the importance of graphite and declining output from a major exporter, the United States (US) and European Union (EU) have declared graphite a supply critical material.
The US and EU almost completely rely on imports to secure graphite supply. More than 50% of the supply of graphite in the US comes from China.
Miners all over the world have joined the race to find more graphite, but analysts still expect the demand to increase faster than the supply – which can only lead to one thing: higher graphite prices.
According to Canaccord: “annual flake graphite production will have to increase by a factor of six by 2020 to meet incremental lithium carbonate requirements for batteries.”