Dear Tesla:
Please stop complaining about China being the only source of
graphite
December 14, 2021 -- InvestorsHub
NewsWire -- via aheadoftheherd.com -- The electrification of
the global transportation system doesn't happen without lithium and
graphite needed for lithium-ion batteries that go into electric
vehicles.
An EV uses the same rechargeable
batteries as found in phones or laptops, only bigger. The cathode,
one of two components that stores and releases electricity,
requires lithium, and nickel, manganese and cobalt— expensive
metals found in one of the most common battery chemistries, NMC
8-1-1. (eight parts nickel to one part manganese and one part
cobalt)
The anode is made from graphite,
a critical metal that is harder to source than lithium. These
materials need to be mined and processed into high-purity chemical
compounds, then made into suitcase-sized battery packs, a procedure
that is dominated by China, which accounts for roughly 75% of
global lithium-ion battery capacity.
Lately Tesla has been talking
about the grip China has on automakers requiring battery raw
materials, in particular graphite, which is only mined in a handful
of countries. Over half of the world's graphite production in 2020
came from China (650,000 tonnes of 1.1Mt), followed by Mozambique
and Brazil at a respective 120,000t and 95,000t.
2020 mined
graphite production. Source: USGS
When it comes to coated spherical
graphite, the graphite end product needed in the battery anode,
China owns 100% of the world's production, because of the ready
availability of graphite there, weak environmental standards and
low costs. It doesn't matter where the graphite is
mined, if it is to become battery-grade, it gets sent to China for
processing.
(China also dominates the
production of synthetic graphite, used mostly in the electrodes
found in electric-arc furnaces for steelmaking; and graphite blocks
used in solar energy storage. Primary synthetic graphite is
manufactured in powder form for high-end lithium-ion batteries.
However, the process is expensive (and not so green), costing the
same amount as making an electrode)
Currently there are no producing
graphite mines in the United States, and only 10,000 tonnes a year
is being mined from two facilities in Canada. The fact is, for the United States to develop
a "mine to battery to EV" supply chain at home, right now it has no
choice but to import its battery-grade graphite from
China.
On top of this, doubts have been
raised over whether China can keep up with surging global graphite
demand. The top producer has already taken steps to retain its
graphite resources by restricting its export quota and imposed a
20% export duty.
It's thought that the increased
use of lithium-ion batteries could gobble up well over 1.6 million
tonnes of flake graphite per year (out of a total 2020 market, all
uses, of 1.1Mt) — only flake graphite, upgraded to 99.9% purity,
and synthetic graphite (made from petroleum coke, a very expensive
and polluting process) can be used in lithium-ion
batteries.
According to the World Bank,
graphite accounts for nearly 53.8% of the mineral demand in
batteries, the most of any. Lithium, despite being a staple across
all Li-ion batteries, accounts for only 4% of total
demand.
The US Geological Survey believes
that large-scale fuel cell applications are being developed that
could consume as much graphite as all other uses
combined.
Can the mining industry crank out
more graphite every year to match this demand? Color me skeptical.
Between 2018 and 2019, world mine production actually declined by
20,000 tonnes, or 1.8%. Global production in 2019 and 2020 was
exactly the same, 1.1 million tonnes.
Tesla is obviously aware of this
and in a recent Bloomberg article the company voiced its
displeasure at the situation.
Joining a host of other auto
suppliers looking for tariff exclusions on various parts, in a
comment to the US Trade Representative, Tesla says
"natural graphite is currently not available in the specifications
nor capacity outside of its current suppliers and China that is
required" for it
to manufacture EV batteries in the U.S. Tesla is
requesting waivers on various forms of artificial and natural
graphite.
The article
'If
Tela's Got Troubles, Everyone Should Worry' goes on to say that if Tesla
is struggling to procure a raw material only available in the form
it needs in China, so are other battery-makers.
Among them are SK
Innovation, a South Korean company investing billions in the United
States to build two battery plants in Georgia, the first of which
is scheduled to open early next year; the company is a supplier to Volkswagen
and Ford.
Where is SK Innovation planning
on getting its battery raw materials? Clearly China. In the article
the company says "there
is currently not enough infrastructure in the U.S. that can deliver
artificial graphite at the quantity and cost" it requires
— similar
to Tesla's submission. What's
more, the firm noted that, because this material is so
key, the
higher costs will be passed on to U.S. consumers and American
companies. If SK can't get it, then battery investment — a
highlight of the U.S.'s EV and manufacturing policy — could
struggle.
It is frustrating, to say the
least, to hear these companies complain about US graphite
dependence on China when the clear and obvious solution is to stop
buying it from there and start mining and processing it right here
in North America.
The United States (and Canada)
needs secure, cost-competitive and environmentally sustainable
sources of graphite, and that means developing graphite deposits
into mines.
A White House report on critical
supply chains showed that graphite demand for clean energy
applications will require 25 times more graphite by 2040 than was
produced worldwide in 2020.
There is no substitute for
graphite in an EV battery and lithium-ion batteries are expected to
be the technology that runs electric vehicles for the foreseeable
future, making graphite indispensable to the global shift towards
clean energy.
Fortunately, there is another
option that most industry observers have not cottoned onto. There
is plenty of North American graphite for local consumption, if
industry and government can find the collective will to "make it
so".
On February 24, 2021, President
Joe Biden signed an executive
order (EO) aimed at strengthening critical US
supply chains. Graphite was identified as one of four minerals
considered essential to the nation's "national security, foreign
policy and economy."
Earlier this year, the Federal
Permitting Improvement Steering Committee (FPISC) granted
High-Priority Infrastructure Project (HPIP) status
to Graphite One Inc.
(TSXV:GPH, OTCQX:GPHOF), which is aiming to develop America's first
high-grade producer of coated spherical graphite (CSG) integrated
with a domestic graphite resource at Graphite Creek,
Alaska.
The HPIP designation allows
Graphite One to list on the US government's Federal Permitting
Dashboard, which ensures that the various federal permitting
agencies coordinate their reviews of projects as a means of
streamlining the approval process.
Graphite Creek is the
highest-grade and largest known flake graphite deposit in North
America, spanning 18 km.
The Graphite
Creek property is located 55 km north of Nome, Alaska.
The project is envisioned as a
vertically integrated enterprise to mine, process and manufacture
Coated Spherical Graphite ("CSG") for the lithium-ion electric
vehicle battery market. Graphite One aims to become the first US
vertically integrated domestic producer to do so.
The latest resource estimate
(March 2019) for Graphite Creek showed 10.95 million tonnes of
measured and indicated resources at a graphite grade of 7.8% Cg,
for some 850,000 tonnes of contained graphite. Another 91.9 million
tonnes were tagged as inferred resources, with an average grade of
8.0% Cg containing 7.3 million tonnes.
A preliminary
economic assessment (PEA) envisions a 40-year operation with a
mineral processing plant capable of producing 60,000 tonnes of
graphite concentrate (at 95% purity) per year.
Once in full production, Graphite
One's proposed graphite products manufacturing plant — the second
link in its proposed supply chain strategy — is expected to turn
graphite concentrates into 41,850 tonnes of battery-grade coated
spherical graphite and 13,500 tonnes of graphite powders per year.
A location in the Pacific Northwest is being considered.
Conclusion
So here's the irony: A large part
of the Biden administration's decarbonization strategy centers
around building electric vehicles and getting drivers to ditch
their gas-guzzling cars and trucks. The White House has set an
ambitious goal of stopping the sale of new fossil fuel-powered
vehicles by 2035.
None of this happens without
lithium, graphite and other battery metals such as nickel, cobalt
and manganese, not to mention copper for EV motors, wiring and
charging stations. Currently the only way for the US to make an EV
transformation is to source its graphite from China. There is no
substitute for graphite in the anode and there is no-one else but
China that processes coated spherical graphite; they have a
monopoly.
A country that is becoming more
and more belligerent by the day, economically, politically and
militarily. China's interests no longer align with the US and
Canada, more with Russia, and yet we are 100% dependent on this
totalitarian regime for making EV batteries that are seen as a key
technology for helping to mitigate the effects of climate change,
which is becoming glaringly apparent through annual droughts,
fires, storms and floods.
Everybody in the automaking game
is looking to China to supply graphite for their battery anodes.
That includes the 92 US companies that already consume it, the 11
US battery gigafactories currently in the works, the 11 EV
start-ups, along with the traditional car-makers nearly all of
which have plans to produce electric vehicles. For details
read Graphite
prices heading higher on market tightness
Billions are being invested in
battery cell plants and new US-based EV production lines yet few
people have bothered to check where they are going to get the raw
materials.
Expensive, polluting synthetic
graphite from China? Natural flake graphite upgraded to 99.9%
purity, also in China? We can do better than this.
Our proposal cuts out the Chinese
middleman and focuses on Graphite One's Graphite Creek project in
Alaska, the highest-grade and largest known flake graphite deposit
in North America.
Battery-grade graphite mined from
Graphite Creek and processed at a plant in the Pacific Northwest
will be cheaper and cleaner than any process done in
China.
The US government has already
identified Graphite Creek as a High-Priority Infrastructure Project
(HPIP), now let's fast-track it, give it the grants needed to build
a mine. Yes, it may take a couple of years, and it may require a
short offtake agreement with a major battery or automaker to ramp
up to full production.
But this is the answer to the
graphite security of supply problem that Tesla, SK Innovation and
others have been whining about. Unfortunately they are too focused
on their own profits and priorities to realize the solution is
right in front of their eyes, in a remote corner of Alaska that
could become the first link of a US mine to battery to EV supply
chain.
Graphite One
Inc.
TSXV:GPH, OTCQX:GPHOF
Cdn$1.89, 2021.12.08
Shares Outstanding
81.5m
Market cap Cdn$157.5m
GPH website
Richard (Rick)
Mills
aheadoftheherd.com
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