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Looming 700k tonne graphite shortage could ‘stunt’ EV demand

A 700,000 tonne shortage of graphite by 2030 demonstrates the need for increased investment in commodity production, or the EV industry could be at risk of “stunted” demand.

Commodity analysts are predicting there will be a severe shortfall of graphite by 2030, a key component in electric vehicle batteries. This could present increased costs for EV manufacturers, which would be passed down to customers, they said.

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Market intelligence provider Project Blue expects around 700,000 tonnes “worth of additional capacity to be required by 2030 in order to keep up with demand. It said that while some projects for mining or producing synthetic graphite are in the process of ramping up, the sheer length of time it takes to build processing capacity – up to 25 years in some cases – will constrain the industry.

A Project Blue research analyst, Reitumetse Chalale, told Supply Management that it is tracking more than 50 natural graphite mining projects outside of China, but they are not close to being operational.

Chalale added: “The shortage in supply rather demonstrates the need for these projects to be developed and supply to ramp up for current battery technology forecasts or else demand will be stunted.”

She explained market trends indicated graphite external to China will be the primary source for the years to come, and that Africa is emerging as an important producer over the coming years. However, as some African producers have already signed offtake agreements with Chinese companies, there won’t be much change in supply chain dynamics.

Procurement software provider Ivalua’s chief marketing officer, Alex Saric, told SM there was a “boom” in graphite demand, but that organisations had failed to “learn lessons from previous shortages”.

He said firms must ensure they are planning for a “variety of shortages”, and not just areas that have been well publicised shortages, such as lithium.

Businesses should look to implement supplier contingency plans which include identifying alternative suppliers, so firms are not “forced to scramble” during shortages to find alternative supply. “Organisations can’t cherry pick what they plan for, they must consider how they would be affected by shortages of every component,” he added.

“To do this, organisations must build strong relationships with suppliers, so they can be buyers of choice when demand is high, and supply is dwindling. This is especially true when it comes to graphite as plenty of other industries, including the steel industry, will be vying for supply.

“The only way to implement these contingency plans and understand the full spectrum of supply shortages is with cloud-enabled technology which can help organisations to mitigate risk and find new suppliers of in-demand materials.”

Commodity analyst Benchmark Minerals also anticipate a graphite deficit by 2030, but said previously that lithium would be the predominant bottleneck in the EV industry.

Benchmark graphite analyst Adam Megginsons explained the graphite shortfall highlighted the need for additional production and processing capacity, adding that “if supply becomes very constrained, prices will rise to a new level that incentivises new projects”.

He told SM: “Projects take a while to reach commercial production volumes. In the meantime, synthetic graphite could plug this supply gap, although its production carries many concerns around high energy usage and carbon intensity.”


Source: Supply Management

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