Graphite + Anodes 2019: Key talking points

Benchmark Minerals Week kicked off in Los Angeles this week, with leading stakeholders from across the lithium ion battery supply chain coming together for Graphite + Anodes 2019.

With presentations from across the industry there was lively discussion around the ongoing natural vs synthetic graphite debate, the future of anode technology, China’s role in the supply chain and much more.

We’d like to thank all of our sponsors, presenters and delegates for making this such an engaging event.

Here we outline some of the key talking points from the first of two industry conferences held during Benchmark Mineral Week.

Graphite to remain the anode material of choice

 Anode materials are entering a new era of growth with plans in the pipeline set to increase nameplate capacity to as much as 1.7million tonnes, up from today’s existing capacity of 660,000 tonnes.

Benchmark forecasts that lithium ion demand for anode materials will increase to 1.9 million tonnes by 2028, as electric vehicle penetration rates increase through the 2020s.

Throughout this period the consensus is that graphite will remain the anode material of choice for lithium ion batteries, despite advances in technology for other materials such as silicon.

By 2030 Benchmark forecasts that natural and synthetic graphite will continue to account for 90% of anode materials (please note that this figure includes silicon additives) in what will be, by then, a much more mature lithium ion battery landscape.

Synthetic vs natural graphite

There was robust discussion around the role of synthetic and natural graphite in anodes as representatives from both spaces put forward their thoughts on the future balance of both materials.

Irrespective of the benefits and challenges of the two materials, Benchmark Minerals forecasts anode demand to lead to annualised growth rates of 26.5% and 20.5% for natural graphite and synthetic graphite respectively.

Outside of China, development of new natural and synthetic graphite supply face headwinds; such as the current low-price natural flake environment and the capital intensity to expand non-Chinese synthetic capacity.

Despite these challenges, the outlook for both materials is promising with the only question being how intense the usage of each will be in the electric vehicle anode materials of the future.

Expect consolidation in the anode space

There are currently 66 anode producers globally, 40 with existing capacity and 18 with EV-scale anode capacity.

Benchmark Minerals expects that supply chain liquidity pressures, compounded by the slowdown in EV demand growth, will see a consolidation of a number of projects -particularly in China – with many small-scale producers or those without existing capacities unable to continue capital commitments.

Despite this possible consolidation, the remaining producers are expected to continue to increase capacity targets in line with expansions being seen downstream in battery production. 

New technologies: solid state and silicon

We heard from exciting companies looking to push the frontiers of lithium ion anode technology using silicon materials. Although graphite will remain the dominant anode material for the foreseeable future silicon’s role is set to increase – with Benchmark forecasting that pure silicon anodes will account for 5% of anode material in 2030.

We also heard of plans for solid state technology and the potentially transformative role in the battery space. However, we heard that we aren’t likely to see solid state in electric vehicles on a commercial scale until 2030.

The testing grounds for these new battery technologies are likely to be in the portable space before we see their use in electric vehicles.

A global new supply pipeline 

With recent non-Chinese supply developments seeing new supply coming from Mozambique, there are a host of natural flake developers outside of China looking to add to this supply across the globe.

We heard that the capex requirements for graphite are amongst the lowest across the mining sector and there are a number of new projects looking to take advantage of the low barriers to entry to bring this new material to the market.

The current low-price environment for flake graphite make project economics challenging. However, it’s clear there is a global pipeline of development companies ready to support future supply challenges.

China and the rest of the world

 In 2019, Benchmark Minerals forecasts China to be responsible for 77% of anode production and 86% of feedstock supply for the anode market.

We were also given a historical context of China’s position in the supply chain. The 2010s have seen China dramatically increase its share of both natural and synthetic graphite markets as it has become the dominant force in the space.

This dependence on China will become a growing concern to western auto companies, particularly as they ramp up electrification plans from the mid-2020s.

Graphite is more than anodes

We were reminded that demand for graphite isn’t just from the battery industry. In fact, currently lithium ion demand accounts for approximately 25% of natural flake graphite production, and a much smaller proportion in the total synthetic graphite market.

Outside of graphite’s traditional uses in refractories, lubricants and electrodes there are also exciting growth stories in its other uses – for instance, we heard expandable graphite is set to grow at over 5% annually.

Strong industrial foundations with limited substitution mean industrial markets will remain the foundation of the industry, but increasingly the growth and value of selling graphite will lie in the lithium ion battery market. 

To receive a free copy of our new Anode Market Assessment – which we unveiled at the conference – contact [email protected].

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