Graphite production in Heilongjiang
province is under the spotlight following pollution complaints
which could lead to restrictions in the world's leading
producing region. Similar complaints in Shandong province only
in December led to the temporary closure of all processing
Graphite dust has contributed to severe
air and water pollution in Luobei County and Jixi City,
creating what is being described as graphite rain.
This has sparked complaints from both residents and business
owners which has thrust the province, which produces 43% of the
world's 420,000 tpa flake graphite in 2012, into the
Pollution is affecting the health of the
local population as well as blighting the areas farming
industry, reports in China say. Furthermore, according to
locals, failure to prevent unofficial mining operations has
compounded these issues by destroying the regions
While recent government rulings have
required companies in some areas to invest in more
environmentally friendly processing infrastructure, the failure
of local governments in regulating Heilongjiangs graphite
sector has caused resource depletion, an inefficient industrial
structure and heavy pollution.
This news follows the more significant
closures of graphite mines in Pingdu where eight companies have
already been shut-down and several more are awaiting government
approval to restart production.
Up to 55 graphite operations were
suspended in Shandong Province at the end of 2013 as surprise
spot-checks revealed a range of environmental concerns. While
not yet reaching this level, similar revelations about
production practices in Heilongjiang Province now threaten to
fuel further intervention in an even more critical region.
The importance of
According to Industrial
Minerals Natural Graphite Report 2012-2016,
Heilongjiang accounts for close to half of Chinas total
flake graphite production capacity, meaning any type of
suspension or consolidation could have major repercussions for
the global market.
Although the ownership structure of
operations in Heilongjiang may prevent this type of
intervention immediately, growing pressures to limit pollution
may be used as a means of improving the structure of the
industry in the longer-term.
There are currently nine major flake
graphite producers based in Heilongjiang, more than in any
other region in China.
Luobei County and Jixi City, the two
graphite producing areas in the region, host the largest mines
in the country however industry experts fear that the
regions resources could be depleted in as little as 20
years if mining practices continue at their current speed.
Many companies in the region are thought
to be using processing equipment which is up to 30 years
old. As well as affecting the efficiency of production in
the region, it is also having a more pressing impact on the
Despite some efforts to encourage
investment in improving the sustainability of production, heavy
In the Mashan district, for instance,
companies have been required to invest between RMB 1.5
2m ($250,000 $330,000) to update processing equipment,
storing methods and transportation infrastructure.
Nevertheless, graphite dust continues to blight local homes and
crops, while tailing ponds pollute water supplies.
As the national government pushes ahead
with plans to improve both the countrys environmental
sustainability and the efficiency of production, heavy
pollution could incite further intervention from industry
The importance of the flake graphite
industry to the local economy makes it unlikely that production
will be completely suspended as the provincial government
pursues market improvements. Graphite companies are a source of
significant investment in the region.
This does not, however, override the
requirement for reform. A number of parallels have been drawn
between today's state of the graphite market and the previous
situation in the rare earths industry.
Out of date infrastructure, poorly regulated markets and
inefficient production methods mean pressure for industrial
change is growing. Whether environmental pressures will provoke
significant action is yet to be seen.
Industrial Minerals Data | Graphite tracks market
prices of natural graphite and provides analysis through the
online portal at
Industrial Minerals Data is:
Simon Moores, Manager (London) -
Shruti Salwan, Analyst (London) -
Albert Li, Analyst (Shanghai) -
Andy Miller, Junior Analyst (London) -