The changing face of natural graphite in lithium-ion batteries

By Shruti Salwan
Published: Saturday, 26 September 2015

Demand for battery grade graphite is materialising, although flake graphite usage is set to decline as tech improves.

A reduction in waste levels and a preference for economical material with high upgrade potential are likely to determine future demand for natural flake graphite in the batteries market.

Growth in natural flake graphite consumption has been closely related to its use in lithium-ion (Li-ion) batteries, anticipated to be the only sector to push up consumption rates in what is otherwise a fragile market.  

A long-predicted rise in demand for battery grade graphite is gradually gaining pace, owing to increasing global interest in electric transport. 

Li-ion battery-powered applications now span much more than the widely touted examples of smartphones, tablet computers and electric vehicles (EVs). 

Graphite for use in battery end markets, whether naturally mined or synthetically produced, is consumed in two forms: spherical and finely ground, pure powder.

Although the tug of war between the use of natural and synthetic graphite in the battery industry persists, natural flake has an edge when it comes to production costs and selling prices as it is considerably cheaper than synthetic graphite. However, the latter has the potential to be more consistent in terms of supply and purity – two important criteria for battery makers.

Natural graphite accounts for around 40% of the current feedstock material for battery anodes, with synthetic graphite accounting for the remaining 60%. Nearly all natural spherical graphite is produced in uncoated form in China, with small volumes produced in Japan and Korea. 

According to the IM Prices Database, prices for uncoated spherical graphite from China range between $2,500 and $3,000/tonne, while coated material stands at $6,000-10,000/tonne. For synthetic spherical graphite, the prices nearly double to as much as $20,000/tonne. 

Growth in flake graphite demand has received the most attention in the Li-ion battery sector, which is largely driven by demand for EVs, although improved technologies and advanced processing.

One group of estimates suggest that it takes three tonnes of natural flake graphite to make one tonne of spherical graphite, while others note that this ratio is contracting. 

This is mainly due to the reduction in wastage offered via advanced processing technologies, which are gaining pace and leading to a reduction in total flake graphite requirements per unit mass of spherical graphite produced.  

According to IM sources, waste ratios have fallen in the last few years from as high as 70% to less than 45%. This decline is likely to continue. 

The decline in waste ratios is set to slow demand for natural flake graphite for spherical production in the medium term, although a drop in wastage levels will still mean that 1kg of anode graphite will require an input of 1.67kg of flake graphite.  

As such, demand from Li-ion batteries, driven by growth in the EV and hybrid EV markets, will remain a major contributing factor in increased demand for natural flake graphite in the near term, unless the material is replaced with substitutes such as synthetic graphite or silicon anodes. 

This evolution is likely to raise concerns over the future of battery grade graphite, as some manufacturers have started to use a blend of both natural flake graphite and other substitutes for consumable applications, limiting demand, with manufacturers switching from a flake graphite base to synthetic graphite. 

Silicon, on the other hand, has issues with charging states, advancing the degradation of battery capacity after relatively few charging cycles, which is why some battery manufacturers use only a small amount of silicon infused into a graphite anode to minimise capacity loss while still utilising the benefits of the material.

Rise and fall of China’s spherical graphite exports


Falling Chinese exports

Spherical graphite exports from China dropped by 40% in the first half of 2015 compared to H2 2014, owing to weak demand, with limited movement seen in prices for battery grade material. 

Chinese producers are facing increased scrutiny around the environmental impact of their operations, which is likely to influence the supply/demand balance in the future. 

With similar downward trends observed in flake and amorphous graphite trades from China, the consistency of graphite supply is being threatened, which could lead to a potential supply shortage in the near term. 

This, combined with growing demand for battery grade graphite in China and elsewhere, will pave the way for new flake graphite supplies being developed outside China in order to meet the growing needs of the Li-ion battery manufacturing market.