Synthetic Graphite Becomes Crucial to Meet Growing Battery Demand

As demand for electric vehicles (EVs) soars, spurred by government incentives and the drive to decarbonize the transportation sector, the global battery industry is set to attract significant attention and investment. Rystad Energy expects total electric vehicle sales this year to reach nearly 10 million units, a 43% jump from 2021 sales. – essential components of the manufacturing process – should also explode.

On the current trajectory of electric vehicle sales and other li-ion battery demand, the total demand for battery anode material (BAM) will increase by 300% by 2025, reaching 2.9 million tons against about 774,000 tonnes last year. The cathode market is expected to experience a similar surge. However, concerns about meeting demand for these components are not equal. Cathode manufacturers are concerned about the availability of raw materials and the possibility of shortages of critical metals like lithium, nickel and cobalt, while anode producers are more concerned about the underlying nature of the raw material.

Anodes are mostly made of natural or synthetic graphite, both of which have unique advantages and disadvantages. A synthetic graphite anode generally has a higher efficiency and is of higher quality, supporting high end applications. Natural graphite has superior environmental, social and governance (ESG) credentials because its production does not require heavy graphitization – converting synthetic graphite feedstocks into battery-grade materials – which uses large amounts of energy and increases the production costs and emissions.

Today, approximately 14% of BAM’s global raw material is natural graphite and 78% is synthetic. However, by 2025, accelerated by increased demand and the ability to scale synthetic production faster and more efficiently than natural production, the synthetic graphite market share is expected to reach 87%. Rystad Energy’s projections for synthetic graphite growth run counter to the prevailing market view, but our data – the first comprehensive study in years – has been backed by the world’s largest cell maker, a anodes and an influential Chinese research house.

“Battery manufacturers are frantically ramping up production capacity to meet demand. Manufacturers need to go from zero to 100 at breakneck speed, so it’s no surprise they’re leaning towards the most immediate solution, synthetic graphite, despite its lower ESG implications. Without an increase in synthetic graphite production, it is difficult to see how EV adoption targets can be met in time,” said Edison Luo, principal analyst at Rystad Energy.

Europe leads in manufacturing capacity expansions, but China still dominates

To meet growing demand, BAM’s global production capacity is expected to increase. China will dominate capacity growth, led by former anode producers BTR and Shanshan, with the country’s total production capacity reaching 4.6 million tonnes by 2025 (92% of planned global capacity), up from 1 .2 million tons last year. Production capacity in Japan and South Korea – two traditional anode manufacturing centers in Asia – is stagnating as investment shifts to cell manufacturing amid fierce Chinese competition.

As the continent’s decarbonization efforts gather pace, the European market will see the most aggressive growth in BAM’s production capacity. Global capacity is expected to grow by 38% per year on average until 2025, but Europe’s capacity will increase significantly, albeit from a modest starting point. Total European capacity will reach 200,000 tonnes in 2025, rising from virtually zero this year.

This growth is in line with several automakers’ plans to build gigafactories in Europe, which require a localized supply chain, often driving higher prices. Most announced European anode plants are expected to use natural graphite as a raw material due to the material’s ESG benefits, including reduced greenhouse gas emissions and reduced operating expenses.

By Zerohedge.com

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