Natural graphite battles for market share in battery anodes

By Sybil Pan
Published: Monday, 06 April 2020

While synthetic graphite is set to retain its dominance for battery anodes, natural graphite is competing.

The battery-anodes segment has always been dominated by carbon-based material, from Mesocarbon microbeads (MCMB) to natural graphite and, finally, synthetic graphite. In the short term, synthetic graphite will maintain a dominant share in the sector while natural graphite’s market share will continue to gradually expand, industry participants said.

China is a major producer of electric vehicle (EV) batteries, with its domestic output of lithium-ion power batteries at 65 GWh in 2018, a 61.3% share of the global total, market participants said. 

Lithium-ion batteries use a cathode, an anode and an electrolyte as conductor. Anode materials account for 25-28% of the production costs for each lithium-ion battery. China recorded about 265,000 tonnes of anode material shipments in 2019, of which artificial/synthetic graphite accounts for about 79%, while the rest is mostly natural graphite, according to a market analyst based in China.

Market participants mostly believe that, short term, graphite material will be at the core of the underlying trends in the anode sector. This includes both artificial and natural graphite, given that the two materials have been produced and utilized commercially.

Synthetic vs natural
The debate around the use of natural or synthetic graphite in anodes is still ongoing across the industry.

"Artificial graphite and natural graphite demonstrate specific advantages in the application of anode material," a producer of flake graphite in China said. "In order to be suitable as an anode material for lithium secondary batteries, the following conditions must be met: high charge and discharge capacity (per unit weight or volume); small initial irreversible capacity losses to ensure the long use of the battery; excellent charge and discharge cycle attributes; high electrical conductivity; eco-friendly material; and easiness to source at a low price," the producer said.

"It’s rare to find materials that fit all requirements. But synthetic graphite has superiorities in cyclic performance for longer life, efficiency in the charging and discharging process and compatibility with electrolytes, which means it gets used most often in the power battery market and high-end consumption market," the producer added.

Synthetic graphite is produced by heating carbon precursors - such as petroleum, coal tar and coke - at temperatures higher than 2,800°C. This implies significant energy costs in the production process. "Natural graphite, mined from natural mines, stands out as the other [main] carbon anode material with its high capacity and lower cost," the same producer added.

Fastmarkets’ assessment of the price of graphite spherical 99.95% C, 15 microns, fob China stood at $2,500-2,600 per tonne on Thursday March 19, stable since the second half of August in 2019. This grade, as assessed by Fastmarkets, is from natural graphite and is uncoated; the material would then require prior coating to be ready for use in battery manufacturing. Natural-based graphite material is typically cheaper than its synthetic counterpart.

Market participants have reported the price of synthetic-graphite anode material to be at around 40,000-100,000 yuan ($5,635-14,054) per tonne as of March 23, 2020. 

Material characteristics also vary between natural-based and synthetic-based graphite used in anodes. One disadvantage of natural graphite is that graphite mines usually produce a flake-graphite flotation concentrate, with a purity ranging from 90-98%. To produce battery-grade graphite from this concentrate, the graphite is purified to about 99.95% and the graphite particle is rounded (spheroidized) - also known as spherical graphite - to modify the particle shape and lower the surface area. Generally, a larger surface means a shorter life and lower energy density. Then the graphite is coated to improve stability and extend the graphite's lifetime.

"At the moment, we think that synthetic graphite will continue to hold the majority [market share], despite the lower cost of natural spherical graphite" a spherical graphite producer in Qingdao said.

"There is the possibility that natural graphite will expand its market share because of its cost advantage, or the possible development of a blend of the two graphite materials," an anode material producer based in Qingdao said.

Optimization and diversification
In 2018, four Chinese companies were among the top five global anode material producers. Shenzhen BTR New Energy Materials, Shanshan Technology, Jiangxi Zichen Technology and Dongguan Kaijin together accounted for an almost 66% share of global output. 

Manufacturers of anode materials that are bullish on the future are vigorously integrating their production lines to realize cost optimization or source diversification, especially after China’s decrease in subsidies for new energy vehicle (NEV) production in 2019.

In synthetic graphite production, raw materials and the graphitization process account for 85% of the total cost, so to optimize the cost structure, efforts will have to be made on both aspects. In the graphitization process, electricity accounts for about 33% of the cost. Therefore, building facilities in regions with lower electricity costs, such as Inner Mongolia, has become the practice for major synthetic anode material producers.

"The average electricity price in Inner Mongolia is at 0.35 yuan per kilowatt hour (kWh), 64% and 43% lower when compared with Japan and South Korea," a producer of synthetic graphite in China said. "Suppose that the electricity consumption per tonne of anode material produced is at 14,000 kWh, and with the average price outside Inner Mongolia at 0.7 yuan per kWh, the production cost would be 9,800 yuan per tonne. With a lower energy price, it translates into a cost reduction of near 50%."

For natural graphite, there are efforts to diversify material sources outside of China.

Australian graphite producer Syrah Resources said its first production of purified spherical graphite from the Battery Anode Material (BAM) plant in Louisiana, United States, had been produced using natural graphite from the company's Balama project in Mozambique in southeast Africa. 

Nouveau Monde Graphite announced on February 26, 2020, that it is producing spherical graphite on a demonstration basis from its micronization and spheroidization facility in Canada, prior to going into commercial production in mid-2022.