China will require exporters of some types of graphite to apply for permits as of Dec. 1 in an apparent escalation of the growing tech trade war between the US and China.
Graphite is critical in the manufacture of batteries for electric vehicles and China is also the largest producer of the mineral. China cited national security as the rationale behind the move. Permits would be required for exports of synthetic graphite material –including high-purity, high-strength and high-density types—as well as for natural flake graphite.
The announcement by China’s Ministry of Commerce and the General Administration of Customs came just three days after the Biden administration imposed more limits on sales of advanced chips by US companies to Chinese firms, closing a loophole on restrictions imposed a year ago.
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Global sales of EVs are on the rise, with 14 million vehicles expected to be sold this year, up from 10 million in 2022, according to the International Energy Agency. According to the Institute for Energy Research, carmakers are hoping to reach agreements to gain supplies of graphite from companies outside of China.
China leads the world’s graphite production, with 65%, according to the US Geological Survey. The mineral is also used in making chips, some chemicals and steel. In EV batteries, graphite is used in battery anodes, the negatively charged portion of a battery.
Beijing in July set export restrictions on gallium and germanium, minerals used in making chips.
Analysts predicted Friday’s move will cause a rise in the average price of graphite, which was already on the rise with the outbreak of the Russia-Ukraine war more than a year ago. Russia had been one of the major graphite suppliers.
Some analysts wondered how many other critical minerals China may restrict for export. The country has 60% of the world’s lithium and 80% of the cobolt, according to US Department of Energy data.
Kien Huynh, chief commercial officer at Alkemy Capital Investments, called the graphite export rule “ a bold and unexpected move [that] has taken us by surprise,” in comments to Reuters.