The acquisition of processed graphite represents a potential
reputational risk for participants in the battery sector,
according to Adam Panayi, managing director of battery
analyst RHO Motion.
"There are reputational issues surrounding
graphite processing, as well as cobalt," Panayi said at
Fastmarkets’ Battery Materials Europe 2019
conference in Amsterdam, September 26-27. "The leaching process
of natural flake graphite can pose problems if it is not
The processing of raw graphite flake requires
chemical leaching to produce battery anode grade graphite. The
chemicals used in this purification process carry the risk of
environmental damage if their disposal is not handled
"Given that the most significant proportion of
supply comes from relatively small [market participants] in
China, [where controls can be lax,] there can also be issues
around safety conditions," Panayi said on the sidelines of the
There have been environmental inspections in China
in recent years which have resulted in a tightening of
production processes. This has increased costs for the
expandable graphite market, which was expected to grow by 5%
per year for the next 10 years.
Most of the processing takes place in China and
there is little production elsewhere. But some companies, such
as Tirupati Graphite, are ramping up their production of
expandable graphite in response to the growing demand.
Companies that manufacture car parts, known
collectively as original equipment manufacturers (OEMs), must
be able to demonstrate that they source their materials
responsibly. This was particularly the case for end products
that were marketed as sustainable, such as electric
"OEMs will attempt to source from the most
reputable companies there are," Panayi said. "This may limit
supply choices over time, which may affect prices."
The battery sector uses both synthetic and natural
graphite flake in a ratio of about 60:40. Producers of both
sources of material will continue to vie for liquidity while
the market develops.
While the reputational risks were currently higher
for processed natural graphite, there were also issues
concerning synthetic material.
"The production of synthetic graphite is
energy-intensive so it has a large carbon footprint," Panayi
Concern about reputational risks in the battery
sector has most closely been associated with artisanal mining
for cobalt in the Democratic Republic of Congo.