Graphite: The EV battery heavyweight

Overshadowed by the global race to build out local sources for lithium, another key ingredient in electric-vehicle batteries — graphite — is equally important as North American industrial policies chip away at China’s dominant supply position.

Automakers and battery-cell manufacturers have been going after lithium for good reason, said John Demaio, CEO of Graphex Technologies, the North American arm of Hong Kong graphite processing company Graphex Group Ltd. But awareness is growing that graphite is also an integral part of battery chemistry.

“Graphite’s the next thing to deal with.”

The material — in naturally occurring and artificial forms — is made up of stacked layers of carbon atoms. It’s is the largest single component of EV batteries by mass, accounting for about 30 per cent of the average battery today, said Eric Stopka, CEO of Anovion Technologies in Chicago, a producer of artificial graphite anodes.

“When that Tesla Model 3 pulls up next to you, it’s got about 17 pounds [eight kilograms] of lithium in it,” he said. “But that same battery requires about 180 pounds [81 kilograms] of graphite.”

While lithium, nickel and cobalt are used for the battery’s positive electrode, known as a cathode, graphite is used for the negative side, or the anode. Despite its importance in EVs, graphite anode production in North America today is negligible.

Natural and artificial graphite are typically used in the same anode material, with each battery-cell manufacturer having a preferred blend to balance performance and cost.

About 80 per cent of natural graphite comes from China, Demaio said, and China produces as much as 90 per cent of the artificial graphite, Stopka said.

GROWTH IN GRAPHITE

By 2030, the dozens of battery-cell plants planned in the United States and Canada will require a combined 1.2 million to 1.5 million tonnes of graphite a year for production, Stopka said, setting the stage for a new industry to take root.

Northern Graphite Corp. in Ottawa, the owner of the only graphite mine operating in North America today, plans to get in on the ground floor.

Its site in Lac-des-Îles, Que., 125 kilometres north of Ottawa, produces about 15,000 tonnes of graphite a year. That’s a drop in the bucket compared with impending EV battery demand. But the company has aggressive plans to add capacity on the mining side and push into anode production.

The U.S. Inflation Reduction Act (IRA), passed last year, as well as Canada’s critical-minerals strategy, launched formally in December, will help Northern Graphite achieve both goals, said company CEO Hugues Jacquemin. For EVs to qualify for the full US $7,500 federal consumer tax credit, the IRA requires vehicles have an escalating percentage of battery materials sourced locally or from American free-trade partners. The requirement starts at 40 per cent of the value of the battery materials for vehicles in 2023 and climbs 10 percentage points annually to 80 per cent by 2027 or later.

The IRA has “changed the game,” Jacquemin said. Previously, automakers and cell manufacturers thought their vehicles could qualify for the EV tax credit if they sourced material from China. “Now if they do, they won’t get access to that rebate.”

Northern Graphite is developing large-scale mines in Ontario and Namibia, and in June signed a letter of intent to purchase a 300-acre (120-hectare) site in Baie-Comeau, Que., 900 kilometres northeast of Montreal on the shore of the St. Lawrence River. There, it plans to build a processing plant capable of 200,000 tonnes of graphite anodes a year.

The company’s ambitious plans for an end-to-end supply chain require hundreds of millions of dollars in funding, but Jacquemin expects governments, as well as automakers and cell companies, will step up. They’ll have to “put their money where their mouth is” if they want to encourage a local supply chain capable of producing anode material that will qualify for the IRA, he said.

AN ENTRANT FROM CHINA

Northern Graphite isn’t the only company feeling the pull of the U.S. tax incentives. After a decade operating mainly in northeastern China, Graphex Group is eyeing North America.

The company focuses on the midstream segment of the graphite supply chain, stepping in after natural graphite has been mined. It’s milled into spherical form and purified to 99.95 per cent carbon. A special process called pitch coating allows the graphite to cycle effectively when incorporated into a battery. Graphex has a 10-year track record of using its processing technology in China, Demaio said, and aims to replicate its success in North America. The opportunity is significant, he said, as the number of experienced graphite players outside China is extremely limited.

Those within China typically have ties to the state and have little interest in, or would face major barriers, expanding into North America.

As it scales up operations, starting with a plant in the Detroit suburb of Warren, Graphex also looks to spin off its North American unit into an independent entity that would concentrate exclusively on its U.S. business.

Other emerging players in natural graphite include Vancouver’s Graphite One Inc., which is developing a mine in Alaska, and Nouveau Monde Graphite Inc., which is advancing both a mine and an anode plant in Quebec.

ARTIFICIAL: A MORE COSTLY ALTERNATIVE

Natural graphite is just one part of the equation, with many battery chemistries also leaning heavily on artificial graphite. The artificial, or synthetic, version — made from petroleum coke, a refinery byproduct — is more costly and requires more energy to produce, but performs better in batteries than its natural counterpart.

Anovion — which in May formalized plans to build a US $800 million (Cdn $1.1 billion) artificial-graphite plant in Bainbridge, Ga. — aims to produce 150,000 tonnes of anode material a year by 2030.

There’s a place for both artificial and natural graphite, Stopka said. But the higher performance of artificial, plus the shorter lead time to build a graphite plant as opposed to a mine, are likely to put the artificial variety in the lead, he said.

Chris Burns, CEO of Novonix Ltd. — an artificial-anode producer ramping up production at a plant in Chattanooga, Tenn. — has similar expectations.

The “most bullish” case for artificial graphite vs. natural would be a five-to-one blend, Burns said, while the more “bearish” scenario would be a one-to-one mix.

“A lot of that’s going to come from how we land on pricing dynamics and how we land on supply chain,” he said. “Right now, outside of Asia, every single [source of battery] material will be at a mass shortage unless we can build all of this planned capacity.”

Novonix, which has roots in Halifax, is on a similar trajectory to Anovion, targeting production of 150,000 tonnes of artificial graphite anode material by 2030.

While the scale-up plans from both Novonix and its competitors are ambitious, Burns said graphite demand in North America is expected to grow so quickly that “we’re still going to be short.” Even if all the advanced-stage artificial- and natural-graphite companies in North America hit their 2030 production targets, Burns said, cell makers will still need to source between one-half and one-third of their anode material from overseas.