Cars drive demand for miracle mineral

When most people think of graphite, they think of pencils. That’s only natural; the ‘lead’ in pencils is actually mineral graphite. The word was coined from the Greek word ‘graphein’, which means ‘to
write’ or ‘to paint’.

But graphite has a wide range of applications, and demand for the mineral is rising dramatically because of its use in batteries for consumer electronics and electric cars.

Natural graphite is metamorphic carbon, formed by high temperatures and high pressure. Graphite has the same chemical composition as diamond, which is also pure carbon, but its different molecular structure means its uses are dramatically different.

Because it is an excellent conductor of heat and electricity and can withstand very high temperatures, graphite is used in steel making, fuel cells, solar cells, semiconductors, LEDs and nuclear reactors.

For cars generally, graphite is a crucial material in cylinder heads, gaskets, clutch materials, exhaust systems and motors.

Graphite is also used as a dry lubricant, reducing friction between two surfaces in situations where oils cannot be used.

Given all these uses, it is not surprising the demand for graphite has grown rapidly in the past decade, with industrialisation in China, India and other emerging economies.

But the real game-changer has been the use of graphite in lithium-ion batteries.

These batteries power a wide range of consumer and industrial products, including laptops, mobile phones, MP3 players and digital cameras.

As demand for such devices has exploded, so has the demand for graphite.

The main components of a lithium-ion battery are two electrodes: a positively charged lithium metal electrode (the cathode) and a negatively charged carbon electrode (the anode).

In lithium-ion batteries, the anodes are typically made of graphite. The batteries are smaller, lighter and more powerful than traditional batteries, which explains their popularity. Lithiumion batteries are used in electric vehicles, most famously by US company Tesla, which plans to produce hundreds of thousands of its environmentally friendly cars each year.

Other manufacturers, too, are ramping up production of electric vehicles. The impact on graphite demand is expected to be huge, according to the ASX-listed company Metals of Africa.

Graphite comes in two forms: natural graphite from mines and synthetic graphite from petroleum coke.

Both types are used in lithium-ion batteries.

Producers have been scrambling to mine more of the mineral, and in recent years the number of listed Australian companies looking for graphite has soared.

Metals of Africa says that it will be able to displace the current supply of synthetic graphite with better quality natural graphite.

The company forecasts that demand for spherical graphite will grow by about 40% each year, assisted by global policies that encourage electric vehicles and green energy initiatives that rely on lithium-ion battery storage units. These green technologies are driving the surge in demand for spherical graphite.

“It is predicted that in China alone there will be five million electric vehicles on the road by 2020-that’s a lot more graphite that is going to be required over the coming years,” Cherie Leeden, managing director of Metals of Africa said.

“It is not only in China that we’re witnessing this growth.

“Brands such as Tesla have become household names in a relatively short period of time due to the popularity and success of their electric vehicles and affordable home storage batteries.

“Now most vehicle manufacturers have released or are working on electric vehicles, all of which consume considerable quantities of graphite in their batteries,” Leeden said.

Benchmark Mineral Intelligence, a research company that specialises in analysis of demand for lithium, graphite and cobalt for the battery market, says exploration for graphite and lithium has shot up. Many miners are rising to fill the supply gap created by Tesla’s ‘gargantuan demand’ for the two resources.

Benchmark estimates that Tesla’s annual demand for spherical graphite in 2021 “will be over 26,000 tonnes a year”. (That estimate is based on Tesla reaching a production total of 300,000 electric vehicles a year, all with batteries ranging in capacity from 60 to 90 kilowatt hours.)

“This does not take into account Tesla Energy’s raw material consumption for its Powerwall and Powerpack utility batteries, which could be up an additional 40%,” Benchmark research suggests

Benchmark says a shortage of spherical graphite is possible.

“While (China) is increasing its spherical graphite capacity, there is a fear that there will not be enough quality product available for internal Chinese needs together with other emerging customers such as Tesla.”

“Considering the preference towards natural spherical graphite, and the fact that demand is outpacing new supply, it is a subject that could soon rise to the surface, and in many ways, that is thanks to Tesla putting it on the radar.”