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According to “The Economics of Natural Graphite (7th Edition),” from Roskill Information Services, the last decade’s development of thermal and chemical processes to produce high-purity natural graphite has enabled a more effective use of graphite resources. Lower grade ores and fines can be now transformed into grades suitable for use in demanding applications such as batteries. Markets previously lost to synthetic graphite, such as batteries and carbon parts, offer opportunities for growth.
High-grade graphite can be further processed by means of intercalation and thermal shock to produce expanded graphite. Materials such as graphite foil, based on expanded graphite, now form the fastest growing end-use sector for graphite. It is characterized by low-volume, high-value applications, including gaskets and seals, heat sinks, and bipolar plates for fuel cells and flow batteries.
Refractories remain the most important end use in terms of volume, accounting for around 33% of the total global demand for natural graphite. The main driver for growth in demand for graphite-containing refractories has been increasing steel production in Asia, particularly China. Future growth in this sector is unlikely to track recovering steel output, since unit consumption of refractory material per metric ton of steel is falling in both China and the CIS as new steel mills are installed.
The use of natural graphite in batteries has increased, partly as a result of the increased availability of high-purity, high-carbon grades, and partly because of the increased output of lithium ion batteries, which use graphite in the anode. Graphite is used in a number of fuel cells under development; the greatest potential for a significant increase in consumption lies with the proton exchange membrane cell for use in automotive and stationary power sources.
China is by far the largest producer and consumer of natural graphite. In 2008, it accounted for around 80% of supply, although the rate at which mine production has grown has slowed to 1.6% per year since 2001. In contrast, output in Brazil, Sri Lanka and North Korea has increased at higher rates, ranging from 3.5% to over 6% per year. Increasing demand for flake graphite has led to a number of potential developments outside China that could add a total of 70,000 tpy to global supply.
Chinese production is still characterized by a large number of small companies, but larger producers are emerging in both Heilongjiang and Hunan. There are now seven Chinese companies capable of producing more than 30,000 tpy of natural graphite. Increasing regulation of mine safety and plant emissions, together with the imposition of export taxes and permits, is likely to lead to further consolidation. Existing and anticipated restrictions in the availability of Chinese graphite in the world market have encouraged foreign producers and processors to invest in production bases in the country.
This region is set to increase in importance for natural graphite, as Chinese consumption is forecast to increase by 8% per year from 2010. Much of this will be linked to a recovery in steel output, but the increasing availability of high-purity grades will feed into China's fast-growing battery industry. Consumption of graphite in reactor components and nuclear control rods will increase as new reactors are brought online.
After a decade in which the average value of exports of Chinese natural graphite showed a slow but steady decline, prices increased in 2007 following the introduction of an export tax and rising energy and transport costs. This upward trend continued in 2008 and, while prices fell back slightly in response to recessionary conditions in 2009, they are expected to recover to an average of $840/t by 2010. In the medium-term, rising production costs, including the cost of complying with environmental controls, will exert an upward pressure on prices.
Visit www.roskill.com/reports/natural for additional details.