Graphite

What it is

Graphite is a naturally occurring crystalline allotrope of carbon. Industrial applications divide into two categories: natural graphite (mined flake, amorphous, and lump forms) and synthetic graphite manufactured from petroleum coke. Both serve as anode material in lithium-ion batteries, but the dominant industrial pathway runs through natural flake graphite purified, milled into spherical particles, and coated with carbon, producing battery-grade "spherical graphite." Each electric-vehicle battery pack requires 50 to 100 kilograms of graphite, roughly twice the lithium content of the same cell. The principal actors are China's processing industry, which controls the conversion from raw flake to spherical product; a small group of African and Canadian miners developing ex-China supply; and battery manufacturers in Japan, South Korea, the United States, and Europe that have no commercial-scale alternative as of mid-2026.

History

Graphite's commercial history begins in the 1560s with deposits found in Borrowdale, England, used first to make pencils. Refractories and steelmaking drove the majority of global demand for the following four centuries. The modern supply-chain chokepoint emerged from a specific industrial build-out: from the late 1990s through the 2000s, Chinese processors invested in the capital-intensive milling, purification, and coating equipment needed to convert raw flake into battery-grade spherical graphite. As lithium-ion batteries, commercialized by Sony in 1991, scaled first in consumer electronics and then in electric vehicles, Chinese producers captured the entire anode-material processing sector. Battery applications overtook refractories and steelmaking as the largest demand category around 2020 to 2022. China introduced its first formal graphite export-licensing controls in October 2023, the earliest use of battery-material supply chains as a geopolitical instrument.

Current state

As of mid-2026, China accounts for roughly 65% of globally mined natural graphite and approximately 97% of spherical graphite production. No domestic natural graphite is produced in the United States. Tanzania more than doubled output to 75,000 tonnes in 2025, becoming the largest non-Chinese mined producer, but lacks the processing infrastructure to upgrade raw flake to battery-grade material at commercial scale. The IEA projects China will supply roughly 80% of battery-grade graphite through 2035; if Chinese supply were excluded, remaining sources would cover only 35 to 40% of projected 2035 demand. The November 2025 suspension of Chinese export licences pushed ex-China spherical graphite prices 60 to 90% above October 2025 levels within two months, illustrating how quickly the processing bottleneck converts into price shocks when China restricts shipments.

Relationships

Graphite's processing concentration exceeds that of cobalt and lithium, whose mined supply is distributed across multiple continents. This single-country processing dependence makes graphite the most acute exposure in the battery materials stack. The US IRA's FEOC restrictions on 45X manufacturing credits, which bar Chinese-owned processors from tax-credit eligibility, are particularly challenging for graphite because no commercial-scale non-Chinese spherical graphite source exists as of mid-2026. African producers Syrah Resources in Mozambique, NextSource Materials in Madagascar, and Nouveau Monde Graphite in Quebec are advancing toward battery-grade processing capacity, but none operates commercially at scale. Synthetic graphite made from petroleum coke is a partial alternative but demands significantly more energy and cost per tonne to reach battery-grade purity, and US supply of petroleum-coke-derived synthetic graphite is limited.

What to watch

Whether China restores graphite export licences in November 2026 or extends the suspension is the single most consequential near-term supply variable. US Commerce Department antidumping and countervailing duty determinations on Chinese natural graphite imports will define the effective price floor for Chinese material reaching the US market. Progress by Syrah Resources, NextSource Materials, and Nouveau Monde Graphite toward commercial-scale spherical graphite output will determine whether an ex-China anode supply chain is viable before 2030. The IEA projects graphite demand to at least double by 2040 in a stated-policies scenario, with battery anodes growing from 28% of total graphite consumption in 2024 to an estimated 62% by 2036; demand growth at that scale makes the processing bottleneck structurally significant beyond any single export-licence cycle.