Outlook to 2030 on global production of battery-grade graphite with an assessment of key players and projects, as well as feedstock trends.

Analysis

Manager, Clean Energy & Transport

Janire Riobello

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<p id="_com_1" language="JavaScript">While the materials used in cathodes may vary depending on the chemistry, virtually all battery anodes today require a substantial amount of graphite, with alternative anode chemistries including silicon-based still constituting a very niche portion of the market. Flake graphite deposits (&gt;85% carbon) are considered the optimal ore type due to their high purity and crystallinity, currently representing about half of global mined production of graphite &ndash; with the remainder being primarily produced from amorphous (microcrystalline) deposits. Mined graphite undergoes a milling and purification process to remove impurities, and is then subjected to a series of mechanical and thermal treatments to increase its crystallinity, improve its particle size distribution, and enhance its electrochemical properties. This results in the production of uncoated purified spherical graphite (uPSG), which is then typically coated with a layer of carbon, normally carbon black or conductive polymer, to produce coated PSG (cPSG) to further increase the electrochemical performance of the active anode material (AAM). Alternatively, cPSG may also be produced directly from synthetic graphite made from carbon-based precursors including petroleum coke and coal tar pitch. While both pathways provide high purity levels, in recent years there has been some preference for synthetic feedstocks among battery OEMs due to their more uniform structure. However, as power costs continue to rise and producers and battery OEMs face increasing pressure to reduce their lifecycle emissions, there seems to be a growing tendency towards the use of flake-derived PSG over synthetic feedstocks.</p>
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<div><span style="font-size: 14px;">Battery-grade graphite refining is largely concentrated in China, which currently produces almost 80% of flake-derived and synthetic PSG respectively. Almost half of the global PSG processing market is currently concentrated among four players operating exclusively in China, with Shanshan Corporation as the world&rsquo;s biggest supplier. PSG produced from synthetic feedstocks currently accounts for almost two-thirds of total PSG supply, but flake-based PSG is projected to register a much stronger growth. In fact, greenfield projects outside of China depict a clear tendency to increasingly utilize unexploited flake deposits to boost cPSG production from natural uPSG feedstocks, with none of these projects favoring synthetic feedstocks. Despite the growing localization of supply in key demand hubs however, China is still projected to account for over two-thirds of total supply of PSG globally by 2030, with synthetic PSG remaining the leading product in China.</span></div>
<p><span style="font-size: 14px;">&nbsp;</span></p>
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<p id="_com_1" language="JavaScript"><span style="font-size: 14px;">This report is part of a series covering all segments of the EV supply chain, and contains strategic insights on growth projections and production trends across major markets and 45+ players, outlining key investments which help shape estimates on annual supply through 2030.</span></p>
<p id="_com_1" language="JavaScript"><span style="font-size: 14px;"><strong>Key takeaways:</strong></span></p>
<ul>
<li id="_com_1" language="JavaScript"><span style="font-size: 14px;">Global supply of battery-grade purified spherical graphite (PSG) grows at a CAGR of 12.7% over 2022-2030, with synthetic PSG remaining dominant despite the strong growth of natural PSG</span><br /><br /></li>
<li id="_com_1" language="JavaScript"><span style="font-size: 14px;">Shanshan sees modest market share losses as growth from other major and smaller players accelerates</span><br /><br /></li>
<li id="_com_1" language="JavaScript"><span style="font-size: 14px;">China continues to dominate the global market albeit seeing a significant market share loss of 10.7 percentage points</span><br /><br /></li>
<li id="_com_1" language="JavaScript"><span style="font-size: 14px;">Greenfield projects outside of China focus on natural PSG production from new flake mining assets, with new players expected to produce over 21% of total global supply by 2030 <br /></span><span style="font-size: 14px;"><br /><br /><img alt="Chart" height="281" width="472" src="https://cdn.aglty.io/stratas-advisors/upload/02242023-Graphite_midstream.PNG" />&nbsp;<br /></span></li>
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<p style="background-color: white; margin-bottom: 0in;"><em>Subscribers&nbsp;can&nbsp;</em><em><a href="~/members/battery-grade-graphite-refining-market-assessment/2023-02-24t000000-0500" target="_self">access the full report</a></em><em>&nbsp;from Stratas Advisors'&nbsp;<a href="~/services/renewable---alternative-fuels/cleantech-and-battery-supply-chains" target="_self">CleanTech and Battery Supply Chain</a>&nbsp;service.</em><br /><br /></p>
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Battery-Grade Graphite Refining Market Assessment

<ul>
<li>Global supply of battery-grade purified spherical graphite (PSG) grows at a CAGR of 12.7% over 2022-2030, with synthetic PSG remaining dominant despite the strong growth of natural PSG<br /><br /></li>
<li>BTR grows exponentially to surpass Shanshan as the world&rsquo;s largest supplier of battery-grade PSG by 2030, significantly expanding its synthetic PSG capabilities<br /><br /></li>
<li>China continues to dominate the global market albeit seeing a significant market share loss of 10.7 percentage points<br /><br /></li>
<li>Greenfield projects outside of China focus on natural PSG production from new flake mining assets, with new players expected to produce about 21.8% of total global supply by 2030</li>
</ul>
<p>&nbsp;</p>
<p>While the materials used in cathodes may vary depending on the chemistry, virtually all battery anodes today require a substantial amount of graphite, with alternative anode chemistries including silicon-based still constituting a very niche portion of the market. Flake graphite deposits (&gt;85% carbon) are considered the optimal ore type due to their high purity and crystallinity, currently representing about half of global mined production of graphite &ndash; with the remainder being primarily produced from amorphous (microcrystalline) deposits. Mined graphite undergoes a milling and purification process to remove impurities, and is then subjected to a series of mechanical and thermal treatments to increase its crystallinity, improve its particle size distribution, and enhance its electrochemical properties. This results in the production of uncoated purified spherical graphite (uPSG), which is then typically coated with a layer of carbon, normally carbon black or conductive polymer, to produce coated PSG (cPSG) to further increase the electrochemical performance of the active anode material (AAM). Alternatively, cPSG may also be produced directly from synthetic graphite made from carbon-based precursors including petroleum coke and coal tar pitch. While both pathways provide high purity levels, in recent years there has been some preference for synthetic feedstocks among battery OEMs due to their more uniform structure. However, as power costs continue to rise and producers and battery OEMs face increasing pressure to reduce their lifecycle emissions, there seems to be a growing tendency towards the use of flake-derived PSG over synthetic feedstocks.</p>
<p>Battery-grade graphite refining is largely concentrated in China, which currently produces almost 80% of flake-derived and synthetic PSG respectively. In 2022, Stratas Advisors estimates that global PSG volumes reached almost 410 KT after registering a year-on-year increase of 9.3%. Of total volumes, PSG produced from synthetic feedstocks accounted for a share of 65.8%, although natural PSG registered a stronger YoY growth of 10.4% against the 8.7% of its synthetic counterpart. In 2022, China was estimated to reach a total volume of over 323 KT, registering a 10% YoY growth from the projected 294 KT produced in 2021, with Heilongjiang province as the largest production hub. Almost half of the global PSG processing market is currently concentrated among four players operating exclusively in China, with Shanshan Corporation as the world&rsquo;s biggest supplier at a market share of 17.3%. <br />&nbsp;</p>
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<p><em>Note: Total volumes and player estimates are based on existing and pending projects at an early or advanced development stage.</em></p>
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<p>Shanshan&rsquo;s PSG output is expected to more than double by 2030 as brownfield expansions are fully ramped up at the company&rsquo;s Xiyang and Baotou sites in the Chinese provinces of Shanxi and Inner Mongolia, which mainly use synthetic graphite as a feedstock. These expansions are expected to support Shanshan&rsquo;s growth in anode production, expected to reach over 620 KT of AAM by 2030. However, Shanshan&rsquo;s expansions do not suffice to defend its market dominance, with market share falling by 2 percentage points from 2022 to 2030.</p>
<p>The significant market share loss of Shanshan is directly attributable to the exponential growth of major anode manufacturer BTR, which is expected to raise its PSG volumes four-fold over the forecast period. BTR currently produces cPSG from both synthetic and natural uPSG feedstocks at its sites in Jixi (Heilongjiang), Tianjin, and Pingxiang (Jiangxi). BTR plans to exponentially ramp up synthetic PSG production at its planned facility in Luobei county in Hegang (Heilongjiang), which is expected to reach a total capacity of 200 KT/year of PSG when fully ramped up. As a result, BTR is expected to become the world&rsquo;s top producer of PSG at a market share of 25.2%, up from 12.4% in 2022.</p>
<p>The rest of Chinese producers see marginal growth over the forecast period as investment in new projects and brownfield expansions remains somewhat bearish. Despite remaining the top supplier of PSG to top anode producers including POSCO Chem, market share loss is significant in particular for Haida, which does not see any major expansions from its existing operations in Heilongjiang and Shandong provinces. Instead, Chinese supply growth is fueled primarily by greenfield additions by China Minmetals, Kaijin, and Graphex Group. China Minmetals is expected to produce natural PSG fed by its flake mining asset in Heilongjiang province by the end of 2023, adding 50 K T/year of PSG volumes to the market when fully operational &ndash; equivalent to about 5% of global supply. Kaijin, which currently holds a market share of 3.7% thanks to its synthetic PSG production asset in Qinghai province, expects to more than double synthetic volumes following the commissioning of its Dongguan site in Guangdong. While this expansion does not result in any market share gains for Kaijin, the company is expected to largely defend its market position retaining a 3.5% share of global supply by 2030. Natural PSG producer Graphex Group is also expected to significantly increase output through the expansion of its Mashan site, raising production from 10 KT/year to 40 KT/year by the end of 2023, as well as through the development of its greenfield 30 KT Qitaihe project in Heilongjiang. Graphex&rsquo;s growth results in substantial market share gains of 4.6 percentage points, producing 7.1% of global supply by 2030. Thanks to these additions, China&rsquo;s total PSG volumes more than double by 2030, with synthetic PSG production accounting for 70% of total volume growth.</p>
<p>Production of PSG is marginal outside of China, though efforts to de-couple global EV supply chains from Chinese supply are increasingly reflected in the graphite refining market as well. Europe currently produces 12.7% of total natural PSG volumes globally, with supply centered mainly in Norway and Sweden. Talga Resources plans to expand its Vittangi facility in Sweden to leverage the brownfield expansion of its flake mine, through this only allows Talga Resources to defend its current market at 1.2% of global supply by 2030. Tokai Cobex and SGL Carbon remain the largest suppliers of synthetic PSG in the European market, yet Europe&rsquo;s market position in global synthetic PSG supply remains minor at a 4.9% share. By 2030, the lack of investment in Europe&rsquo;s PSG capacity results in a steep market share loss in both natural and synthetic PSG supply to reach 5.3% and 2.1%, respectively &ndash; equivalent to 3.5% of total global supply, down from 7.6% in 2022.</p>
<p>Highly incentivized by the Inflation Reduction Act&rsquo;s (IRA) provisions on North American production requirements, PSG supply in the US and Canada grows exponentially at a CAGR of 25.7% from 2022 to 2030. Albeit from a low base, Syrah Resources is currently the largest North American natural PSG producer through its Vidalia facility in the US state of Louisiana, with Showa Denko&rsquo;s Ridgeville facility in South Carolina as the main synthetic PSG production base in the region. To support a fast-growing domestic anode manufacturing industry, the US sees the addition of over 100 KT/year of PSG volumes by 2030, over 60% of which is expected to be produced from natural graphite feedstock. Graphex Group plans to penetrate the North American market through its 15 KT Michigan site developed together with Emerald Energy Solutions, with Westwater Resources adding another 7.5 KT/year of PSG partially fed by the company&rsquo;s planned flake assets in Alabama. Graphite One Inc is also expected to leverage its flake asset in Quebec at its planned PSG and AAM production facility in Washington state, becoming the largest supplier of natural PSG in North America after reaching a capacity of 41.8 KT. Synthetic graphite producer NOVONIX is also undergoing an expansion of its Chattanooga facility in Tennessee, although North American synthetic graphite supply will continue to represent a minor portion of total regional production of PSG by 2030 at a market share of 21.2%. By the end of the decade, North America is projected to strengthen its position in the global PSG market to supply about 9.2% of total PSG production, up from 3.8% in 2022.</p>
<p>Japan is currently the second-largest supplier of PSG after China at a market share of 7.9% thanks mainly to the strong market presence of synthetic graphite producers Showa Denko and Tokai Cobex. However, with investment in domestic expansion largely lacking, Japan&rsquo;s market share is projected to fall to a marginal 3% by 2030, with non-Chinese supply heavily shifting towards North America, Africa, and Australia. Madagascar and Tanzania see a rapid growth in domestic PSG supply from their Molo and Chilalo flake mining projects being developed by NextSource Materials and Evolution Energy Minerals respectively, which are expected to add over 55 KT of natural PSG annually to global markets when fully operational. Growth is even more accentuated in Australia, which sees domestic natural PSG production grow to 95 KT/year by 2030 following the start-up of greenfield mining assets. Renascor Resources is expected to become the regional leader upon the ramp-up of its Siviour project in South Australia, growing to produce 3% of global supply by 2030. However, EcoGraf and International Graphite plan to build fully-integrated graphite projects by adding AAM production to their graphite mining and PSG sites in Kwinana and Collie in Western Australia respectively, potentially reaching a market share of 2.5% of global PSG supply by the end of the decade.</p>
<p>India also emerges as one of Asia&rsquo;s key PSG suppliers despite its current negligible volumes, which do not align with the country&rsquo;s strong production of synthetic graphite. Indian natural PSG production is expected to be fed primarily by Madagascar flake resource, which BlackEarth and Tirupati plan to exploit in the Atsimo-Andrefana region. Both companies plan to import graphite ore into India for specialty product processing, a portion of which includes PSG production for the global battery market. As their respective facilities in Maharastra and Gujarat are gradually ramped up, Indian PSG supply is expected to reach over 9 KT/year, equivalent to 0.8% of global supply.</p>
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<p>Greenfield projects outside of China depict a clear tendency to increasingly utilize unexploited flake deposits to boost cPSG production from natural uPSG feedstocks, with none of these projects favoring synthetic feedstocks. As a result, flake-based PSG grows at a CAGR of 17.1% from 2022 to 2030, representing 46.4% of the market by 2030, up from 34.2% in 2022. Synthetic PSG growth is exclusively bolstered by massive additions in China, although the rate of growth is slower at a 9.9% CAGR. As localization of supply grows, OEMs in key demand hubs including Europe and North America are expected to favor supply of PSG with higher ESG ranking and at cost-competitive prices. As a result, these markets are expected to see growing demand for natural PSG for AAM manufacturing over synthetic, though it is unlikely that supply will be sufficient to completely detach from China. In fact, China sees considerable market share losses as projects in other markets come online, but China is still projected to account for 68.7% of total supply of PSG globally by 2030. Synthetic PSG remains the leading product in China too, representing over 68% of the country&rsquo;s production by the end of the decade.</p>
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<p>While the materials used in cathodes may vary depending on the chemistry, virtually all battery anodes today require a substantial amount of graphite, with alternative anode chemistries including silicon-based still constituting a very niche portion of the market. Flake graphite deposits (&gt;85% carbon) are considered the optimal ore type due to their high purity and crystallinity, currently representing about half of global mined production of graphite &ndash; with the remainder being primarily produced from amorphous (microcrystalline) deposits. Mined graphite undergoes a milling and purification process to remove impurities, and is then subjected to a series of mechanical and thermal treatments to increase its crystallinity, improve its particle size distribution, and enhance its electrochemical properties. This results in the production of uncoated purified spherical graphite (uPSG), which is then typically coated with a layer of carbon, normally carbon black or conductive polymer, to produce coated PSG (cPSG) to further increase the electrochemical performance of the active anode material (AAM). Alternatively, cPSG may also be produced directly from synthetic graphite made from carbon-based precursors including petroleum coke and coal tar pitch. While both pathways provide high purity levels, in recent years there has been some preference for synthetic feedstocks among battery OEMs due to their more uniform structure. However, as power costs continue to rise and producers and battery OEMs face increasing pressure to reduce their lifecycle emissions, there seems to be a growing tendency towards the use of flake-derived PSG over synthetic feedstocks.</p>
<p><span style="font-size: 14px;">Battery-grade graphite refining is largely concentrated in China, which currently produces almost 80% of flake-derived and synthetic PSG respectively. Almost half of the global PSG processing market is currently concentrated among four players operating exclusively in China, with Shanshan Corporation as the world&rsquo;s biggest supplier. PSG produced from synthetic feedstocks currently accounts for almost two-thirds of total PSG supply, but flake-based PSG is projected to register a much stronger growth. In fact, greenfield projects outside of China depict a clear tendency to increasingly utilize unexploited flake deposits to boost cPSG production from natural uPSG feedstocks, with none of these projects favoring synthetic feedstocks. Despite the growing localization of supply in key demand hubs however, China is still projected to account for over two-thirds of total supply of PSG globally by 2030, with synthetic PSG remaining the leading product in China.</span></p>
<p><span style="font-size: 14px;">This report is part of a series covering all segments of the EV supply chain, and contains strategic insights on growth projections and production trends across major markets and 45+ players, outlining key investments which help shape estimates on annual supply through 2030.</span></p>
<div>
<p id="_com_1" language="JavaScript"><span style="font-size: 14px;"><strong>Key takeaways:</strong></span></p>
<ul>
<li id="_com_1" language="JavaScript"><span style="font-size: 14px;">Global supply of battery-grade purified spherical graphite (PSG) grows at a CAGR of 12.7% over 2022-2030, with synthetic PSG remaining dominant despite the strong growth of natural PSG</span></li>
<li id="_com_1" language="JavaScript"><span style="font-size: 14px;">Shanshan sees modest market share losses as growth from other major and smaller players accelerates</span></li>
<li id="_com_1" language="JavaScript"><span style="font-size: 14px;">China continues to dominate the global market albeit seeing a significant market share loss of 10.7 percentage points</span></li>
<li id="_com_1" language="JavaScript"><span style="font-size: 14px;">Greenfield projects outside of China focus on natural PSG production from new flake mining assets, with new players expected to produce over 21% of total global supply by 2030</span><span style="font-size: 14px;"><br /></span><strong style="color: #b3b3b2; font-family: 'NewsGothicNo2W01-Medium 710407', sans-serif; font-size: 17.5px;"></strong></li>
</ul>
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