China’s Ministry of Commerce announced new export controls on certain types of graphite, including spherical graphite, to take effect December 1. A ministry spokesperson argued the measures would help strengthen nuclear non-proliferation; many nuclear reactors use graphite to moderate and sustain nuclear reactions. Graphite is also a key component in emerging energy technologies, including electric vehicle batteries and hydrogen fuel cells. In August, China enforced similar export controls on gallium and germanium in a tit-for-tat move responding to Western restrictions imposed against the country’s microchip manufacturing industry. The new restrictions follow a European Union decision to investigate subsidies given to Chinese EV producers, something that angered Chinese officials.
Why it matters: Intensifying political, economic, and security competition between the United States and China, and deepening economic competition between the EU and China, appear to be fueling an escalatory spiral of trade and technology limitations. High technology products—including many clean energy technologies—have been at the center of this war for technological, manufacturing, and supply chain dominance.
China is far and away the leading producer of graphite ore, accounting for about 65% of global production in 2022 (850,000 tons); in comparison, the second largest producer, Mozambique, mined just 13% (170,000 tons) of the world’s graphite that year. China also refines 90% of graphite used globally for EV battery anodes. The United States does not produced graphite domestically; after China and Mozambique, the largest producers are Madagascar and Brazil.
The new export controls do not automatically block exports, but instead impose permit requirements, which provide Chinese officials with future discretionary authority to approve or deny export transactions on a selective basis as an instrument of political pressure. From this perspective, the export controls are likely an implicit warning rather than a step toward reducing China’s graphite exports. That said, to the extent that tensions continue to grow between China and the U.S., the EU, Japan, South Korea, or others relying on imported Chinese graphite, Chinese steps to block specific transactions (or to ban exports to individual countries) might not be too far off.
The U.S. imported 72,000 tons of graphite in 2022, with about one-third of the total sourced from China. Looking ahead, however, the U.S. Geological Survey projects that with up to twenty-one lithium-ion battery plants possibly beginning operations in the next few years, spherical graphite demand could grow to 1.2 million tons annually (more than one-third higher than China’s total current annual production). China’s new policy only further increases the urgency of developing alternative supply chains for graphite and other critical minerals.