More graphite needed for EVs – a lot more
Critical Minerals Alliances 2022 - September 12, 2022
Last updated 9/12/2022 at 5:29am
By 2030, batteries will likely need more than 5x all the graphite mined in 2021
While shortages of the lithium and nickel needed for electric vehicle batteries has dominated news headlines over the past year, the massive demand for graphite has largely been overlooked. As the primary ingredient in the anode side of lithium-ion batteries, graphite is the single largest element in lithium-ion batteries and the mining sector's inability to keep pace with skyrocketing demand of this critical mineral could put the brakes on the EV revolution.
According to the global lithium-ion battery supply chain experts at Benchmark Mineral Intelligence, a megafactory capable of producing 30 gigawatt-hours of battery storage annually requires about 33,000 metric tons of graphite per year.
When you extrapolate this out over the more than 300 gigafactories that are being built or are in the pipeline, this equates to up to 9.9 million metric tons of graphite per year to feed all these lithium-ion battery plants running at full capacity. Using the 70-70 rule – a more realistic measure that 70% of these battery plants go into production running at an average of 70% design capacity – the global lithium battery sector would need about 4.9 million metric tons of graphite per year.
This correlates with S&P Global Platts' forecast that by 2030 it will take 5 million to 6 million metric tons of graphite to meet annual global demand for this critical carbon material.
This compares to only about 1 million metric tons that was mined globally to meet the demands of all industrial sectors during 2021, according to "Mineral Commodity Summaries 2022," an annual report published by the United States Geological Survey.
Ramping up graphite production by 500 to 600% over 10 years is an enormous task for global miners.
"Supply will struggle to catch up with graphite demand," said George Miller, senior price analyst at Benchmark.
Emerging NA supply chain
Currently, China dominates both the mining of graphite and upgrading this carbon material into the coated spherical graphite that is packed into the anodes of lithium-ion batteries.
According to USGS, the Middle Kingdom accounted for 82% of the world's mined graphite last year and produced nearly 100% of the battery-grade anode material.
With only limited supplies of graphite currently being mined in Canada and Mexico, and graphite anode material production at its earliest stages in the U.S., North American automakers are nearly 100% dependent on imports from China for this increasingly competitive product.
"North America produced only 1.2% of the world's graphite supply with production in Canada and Mexico," USGS inked in its 2022 minerals report. "Two companies were developing graphite mining projects in the United States-one in Alabama and one in Alaska."
Both these companies – Westwater Resources Inc. in Alabama and Graphite One Inc. in Alaska – have plans to develop both graphite mines and the processing facilities to produce the spherical graphite that serves as the anode material in most lithium-ion batteries.
Syrah Resources Ltd. is also scaling up the production of battery-grade anode materials at Vidalia, a facility in Louisiana that has attracted the attention of both Tesla Inc. and the U.S. Department of Energy.
Tesla entered into a deal to buy coated spherical graphite produced at Vidalia, and DOE has loaned Syrah $102.1 million to fund the expansion of this active anode material in Louisiana.
"Projects like Syrah Vidalia are critical to our national security, our foreign policy, building our supply chain, and our economy," said DOE Loan Programs Office Director Jigar Shah.
Ford Motor Company has also entered into a deal to off-take graphite from Syrah's Vidalia facility.
In Canada, Nouveau Monde Graphite Inc. is advancing a complete supply chain to provide battery and EV manufacturers with zero-carbon graphite anode material from the hydro-powered mine and processing facilities it is developing in Quebec.
"We are making significant progress on our objectives at a time when the market is feeling the pressure of limited supply options, rising prices and complicated logistics," Nouveau Monde Graphite Chair Arne Frandsen said in March.
Alabama is rapidly emerging as a hub for the production of coated spherical graphite and the EVs that are driving enormous new demand for this anode material.
In April, Alabama Gov. Kay Ivey and Congressman Mike Rogers joined other state and local government policymakers and business leaders to break ground on a $202 million coated spherical graphite processing facility being developed by Westwater.
"Alabama, which is home to Mercedes-Benz, Honda, Hyundai, Toyota and Mazda, is among the top four states in the nation in automobile production," said Gov. Ivey. "This plant will make Alabama an even bigger player in the fast-growing electric vehicle sector."
The Mercedes EQS EV being produced in Alabama needs roughly 250 pounds of graphite for each 107.8-kilowatt-hour battery that provides this luxury sedan with an impressive 350 miles of range on a single charge.
While EV battery sizes vary by make and model, the Mercedes EQS represents a middle ground between more economical cars like the standard range Tesla Model 3, which needs about 120 lb of graphite for its battery, and full-size SUVs like the GMC Hummer, which requires roughly 500 lb of this anode ingredient.
With every major automaker on Earth electrifying their vehicles, there is massive new demand for the coated spherical graphite that will soon be produced at the Westwater facility in Alabama.
Alabama Graphite Products, a Westwater subsidiary, will use a proprietary process to purify raw graphite and refine it into battery-grade anode material.
Westwater says this process is safer and more environmentally friendly than the hydrofluoric acid-based process commonly used in China and elsewhere.
The initial phase of this processing plant, which is slated for completion by mid-2023, is designed to produce 7,500 metric tons of refined graphite.
"The construction of this plant is the result of a lot of work, cooperation, planning and vision by numerous people over a number of years," said Chad Potter, President and CEO of Westwater Resources and Alabama Graphite Products.
Last year, Gov. Ivey signed an incentive package that will provide Alabama Graphite Products with $29.9 million in jobs and tax credits over 15 years and $925,000 in job training and employee recruitment incentives for a facility.
"The cooperation and assistance we have received – from tax incentives to utilities to workforce development – has been incredible. We would not be here today without their support," Potter added.
In the beginning, the feedstock for the Alabama Graphite refinery will be imported, but Westwater intends to develop a mine at its Coosa project in the famed Alabama Graphite Belt by 2028.
According to a 2015 estimate, Coosa hosts 78.5 million metric tons of indicated resource averaging 2.39% (1.9 million metric tons) graphite.
Establishing a mine at Coosa would provide a much-needed local supply of graphite for the Alabama refinery and a new source of jobs for residents of Coosa County.
"As our investment of millions of dollars and our commitment to invest even more indicate, we are firmly committed to Alabama and this community, and we look forward to being here for many years to come," said Potter.
Much like Westwater, Graphite One Inc. is looking to establish a complete graphite anode material supply chain in the U.S., which would involve developing a mine at its enormous Graphite Creek deposit in Alaska that would provide the primary feed for a battery material processing and recycling facility in the state of Washington.
Located along Alaska's west coast about 50 miles north of the legendary gold mining town of Nome, Graphite Creek hosts 32.5 million metric tons of measured and indicated resources averaging 5.25% (1.7 million metric tons) graphite, plus 254.7 million metric tons of inferred resource averaging 5.11% (13 million metric tons) graphite.
A prefeasibility study finalized in August envisions a mine at Graphite Creek that would produce an average of 51,813 metric tons of graphite concentrate per year, which would be shipped to the company's planned facility in Washington where low-cost and low-carbon hydroelectricity will be used to upgrade the concentrates to spherical coated graphite and other products.
The capital cost to develop the mine and processing facility is estimated to be US$950 million (C$1.24 billion), which includes a contingency of US$130 million (C$170 million).
With a post-tax internal rate of return (8% discount) of 22% and net present value of US$1.04 billion (C$1.36 billion), the financially robust operations are expected to pay back the capital in 5.1 years.
These figures do not take into account the tax credits offered to suppliers of EV battery materials under the Inflation Reductions Act.
Under this legislation, companies that produce lithium-ion battery materials in the U.S. qualify for a tax credit equal to 10% of the production costs. This credit begins to fade by 25% per year starting in 2030.
The Inflation Reduction Act also offers a second tax credit equal to 10% of the costs incurred in respect to the production of 99.9% graphite in the U.S. This credit does not have a sunset date.
The Graphite One projects detailed in the PFS are expected to qualify for both credits.
The company also plans to establish a lithium-ion battery recycling facility alongside its processing plant.
"With this new proposed recycling division joining our Graphite Creek mine and Advanced Graphite Materials Manufacturing Plant as the third link, Graphite One plans to bring the full circular economy to the U.S. graphite supply chain," said Graphite One President and CEO Anthony Huston.
Environmentally responsible production of EV anode material lies at the very foundation of Nouveau Monde's strategy to deliver carbon-neutral graphite from the supply chain it is developing in Quebec.
"Battery minerals cannot power a sustainable energy revolution unless their extraction and value-added transformation are done on a 'Zero-Harm' basis," said Nouveau Monde Graphite Chairman Arne Frandsen.
A feasibility study updated in July details plans for a mine at its Matawinie project that is expected to produce an average of 103,328 metric tons of high-purity flake graphite concentrate per year.
This graphite concentrate will be trucked roughly 95 miles (150 kilometers) to the company's advanced material plant at Bécancour, where it will be upgraded to 42,616 metric tons of the coated spherical anode material for lithium batteries and 3,007 metric tons of large flake graphite for other industrial purposes.
"NMG is positioning itself as North America's largest, fully integrated natural graphite production to relieve battery and EV manufacturers from their overreliance on Chinese production," said Nouveau Monde Graphite President and CEO Eric Desaulniers.
As a forward-looking company that is supplying a vital ingredient to the lithium-ion batteries storing renewable energy and powering electric vehicles, Nouveau Monde is shrinking the carbon dioxide footprint of its Quebec operations.
To accomplish this, the company plans to have an all-electric fleet of mining equipment charged with Quebec's abundant hydroelectricity digging up and hauling the graphite at Matawinie.
This idea is so ahead of the curve that the electric mining equipment it plans to use has not been invented yet.
To overcome this hurdle, Nouveau Monde partnered with Caterpillar Inc. to develop, test, and produce a fleet of all-electric Cat mining equipment for its coming graphite mine in Quebec – a landmark collaboration for Nouveau Monde and the mining sector at large.
"We are proud to be a driving force for our peers as we strive to electrify our operations to meet our carbon neutrality commitments while maintaining the productivity and efficiency standards of our mining operations," said Desaulniers. "Even more gratifying and important to our corporate mission is that our project can serve as a springboard for the future of the mining industry by collaborating with Caterpillar on these cutting-edge technologies."
As an added bonus for Nouveau Monde, each of the battery-powered Cat mining machines will need about a ton of graphite.
Desaulniers told Data Mine North that battery manufacturers interested in securing Nouveau Monde Graphite have expressed interest in supplying Caterpillar with the batteries to power its electric machinery at Matawinie and around the globe.
Nouveau Monde plans to begin delivering ESG-boosting graphite into EV supply chains in 2023.
"I am confident that the ESG-minded team at NMG can capitalize on our exclusive ecotechnologies and industry-leading practices to position the company as a Western World's trailblazer for competitive, sustainable, and local graphite advanced materials production," said Frandsen.