Apr. 1, 2025 - For a long time graphite has barely rated a mention as a critical material of electric vehicle (EV) batteries, but a significant anticipated shortfall coupled with strong demand growth from three different markets has culminated in the “perfect storm”.

“The perfect storm has been brewing and the wind and rain have just begun. The storm is here,” said James Cross, CEO of Canadian graphite hunter E-Power Resources.  

“Prices of natural graphite are about 15% above their extreme lows reached in March 2024. 

“All-in sustaining costs are actually still slightly above -100 mesh graphite prices, the flake size used most in batteries. This is unsustainable. 

“In addition to EV batteries, or even more importantly, the defence industry stops without graphite. Artillery, tanks, ships, and ammunition all require graphite.

“Without graphite, the manufacturing base grinds to a halt.” 

In 2024, natural graphite production was about 1.3 million tonnes, with synthetic graphite production around 3 million tonnes, and China controls nearly 80% of supply and holds over 95% market share for battery grade graphite specifically. 

Demand the same year was in the vicinity of 3.7 to 3.8 million tonnes, flowing largely from the steel and battery industries, according to The Oxford Institute for Energy Studies.

A 50 kilowatt-hour EV battery requires 100kg of graphite, substantially more than the lithium, manganese, cobalt and nickel combined that is needed to make the battery.

Graphite serves to make the anode – the negative terminal – in a lithium-ion battery. This is due to its increased electrical conductivity and stability.   

“Graphite was often ignored in spite of being the largest material component of EV batteries,” Cross explains.   

“Without graphite, there is no lithium-ion battery.”  

Peak Asset Management Executive Director Niv Dagan said that the surge in EV battery demand has led to strong demand for high-quality graphite, resulting in supply constraints. 

“This imbalance is expected to continue, with EV battery demand projected to reach 9,300 gigawatt-hours (GWh) by 2035,” Dagan says. 

“Strong demand and supply constraints have kept prices elevated. High-quality flake graphite commands between $2,000 and $2,400 per tonne, while spherical graphite reaches $4,000 to $4,700 per tonne.”

Benchmark Mineral Intelligence forecasts a 140% increase in natural graphite demand by 2030 which will require an extra 1.7 million tonnes of material. This equates to around 31 new natural graphite mines and 12 new synthetic graphite plants globally to provide that supply. 

The ‘perfect storm’ comes into play with the realisation that major mining countries like the US, Canada and Australia have virtually no domestic supply. 

“There are lithium and nickel projects all over the western world, but how many graphite projects are there? Not nearly enough,” Cross tells this news service.  

“As an example, the USA has no production, Canada has one very small mine, and Australia has no production either.”

By 2026, North American battery manufacturing alone is expected to reach 600 GWh, up from 56 GWh in 2021, and by 2030 it is tipped to hit 1 terrawatt-hour. That is a 1,686% surge in less than a decade. 

US strikes back

This lack of production and rising demand has fuelled efforts by the US to protect its industry and reduce China’s control. 

In early February 2025, US graphite producers won a preliminary International Trade Commission (ITC) case against China. 

The ITC ruled that China had suppressed the establishment of the domestic graphite industry by exporting artificially cheap graphite to the US. 

A group known as the American Active Anode Material Producers, which includes ASX-listed Novonix (ASX:NVX), initiated a case with the ITC and the US Department of Commerce in December 2024. 

The group called for an investigation to be launched into whether China was exporting natural and synthetic graphite at unfair prices to the US and seeking import tariffs as a remedy.

Novonix interim CEO Robert Long said at the time of the ruling that China’s strategic efforts to control the global critical minerals supply chain, fuelled by massive government subsidies with the clear intent of suppressing fair competition, were a threat to US energy and national security. 

“The ITC’s ruling represents an important step towards leveling the playing field for US critical minerals producers and bringing transparency to the global marketplace,” he said. 

Now that the ITC has made its preliminary determination, the case will proceed simultaneously before the US Department of Commerce and the ITC under the jurisdiction of US antidumping and countervailing duty statutes. 

If the investigation proves conclusive, the US Department of Commerce will assess the use of additional tariffs equal to the extent of unfair pricing by the Chinese.

Novonix’s Riverside facility, located in Chattanooga, Tennessee, is set to become the first large-scale production site dedicated to high-performance synthetic graphite for the battery sector in North America. 

It is slated to begin commercial production in early 2026, with plans to grow output to 20,000 tonnes each year to meet current customer commitments for Panasonic, Stellantis, and PowerCo.

Massive defence budget but little graphite

To help grow domestic production of critical minerals, US President Donald Trump has invoked a wartime measure. He tapped the Defence Production Act to provide financing, loans and other investment to incentivise homegrown production. 

“The country with the world’s largest defence budget produces no graphite and it needs a lot of it,” Cross says.  

“The US has very little in the way of graphite exploration and development as well.  Extreme measures will be taken by western nations to guarantee supply.” 

Ahmed Mehdi, a senior research fellow at The Oxford Institute for Energy Studies, says graphite is dubbed the “silent partner” of the energy transition because it has escaped mainstream attention unlike other “new energy” industries such as lithium.

“In Western government circles, discussion of graphite value chains have become synonymous with Chinese predatory pricing, dumping behaviour and the need for infant industry protection,” he says in a February 2025 report. 

E-Power’s Cross tells Mining.com.au that industry, especially the EV battery industry, very carefully avoided any talk of graphite.

“In my view, this is because it was their true, raw material vulnerability. If you listen to battery producers, they talk about nickel, and some of the other metals in some cathodes, and of course, the big cliche, lithium,” he says. 

Mehdi supports this view saying in the battery market, it has typically been cathode active materials – such as lithium, nickel, and cobalt – that have dominated supply-side concerns among governments and automotive original equipment manufacturers.

“This is not surprising. While graphite is the largest component by weight in a battery pack for anodes, AAM (anode active material) only accounts for 7–10% of the cell cost,” he explains.  

“Lithium, on the other hand, can make or break cell cost competitiveness.” 

Mehdi notes that at the same time, anode technology developments have lagged the cathode, with graphite’s incumbent status remaining largely unchanged. 

“And for good reasons, too: graphite provides high thermal and electrical conductivity, reasonable energy density, and strong cycling ability, and is low cost – the latter an important consideration for such a margin-sensitive industry as the global EV and energy storage market,” he says. 

E-Power is advancing its flagship Tetepisca property in Québec, which sits in the Tetepisca Graphite District – an active graphite exploration and development district with defined measured and indicated resources in excess of 120 million tonnes at an average grade of about 14% graphitic carbon.

The project is a three-hour drive from the Port of Baie-Comeau, which will be home to a 200,000-tonne-per-annum battery anode material manufacturing facility partially funded by a corporation owned by the Québec Government.

Cross says the US Department of Defense is already creating grants to help develop Canadian projects to fast-track them into production.

Peak Asset Management expects the momentum in the graphite sector to continue. 

“We feel that the graphite market is poised for substantial growth, driven by accelerating EV battery demand, supply chain regionalisation efforts, processing capacity expansion outside China, rising energy costs affecting synthetic graphite production, and a growing emphasis on environmental, social, and governance (ESG) compliance,” Dagan says. 

Meanwhile, Mehdi expects that by later this year, graphite demand from the battery sector will comfortably overtake demand from the steel sector.