Natural Graphite: The Material for a Green Economy

As the world moves towards decarbonization, electric vehicles (EVs) and clean energy technologies offer a path towards a sustainable future. However, these technologies are mineral-intensive, and the minerals they use are becoming increasingly valuable.

Graphite is one such mineral.

As the anode material and single largest component of lithium-ion batteries, graphite has a key role in the clean energy transition. But there are two types of graphite: natural and synthetic. Which one is better for the green economy?

The above infographic from Northern Graphite outlines the need for graphite and weighs the pros and cons of the two types of graphite.

The Need for Graphite

Graphite has six key properties that make it essential for EVs and other clean energy technologies.

• High electrical conductivity
• High thermal conductivity
• Relatively low cost
• High energy density
• Long cycle life
• High temperature resistance

A single EV contains 66.3kg of graphite, according to the IEA. With more EVs on the road, the world will need more graphite. In fact, among critical battery metals like cobalt, nickel, and lithium, graphite is projected to see the largest increase in demand through 2029.

Batteries can use both types of graphite as anode materials. As of 2020, synthetic graphite dominated the anode market with 58% of market share. However, this could change over the next decade. By 2030, natural graphite is expected to see a 1437% increase in anode demand, compared to a 705% increase for synthetic graphite.

Why is the demand for natural graphite rising at a faster rate?

Natural Graphite vs Synthetic Graphite

The methods of production make the key distinction between the two types of graphite. Natural graphite occurs naturally in mineral deposits and miners extract it from the ground through open-pit and underground mining. On the contrary, manufacturers make synthetic graphite by high-temperature treatment of carbon materials like petroleum coke and coal tar.

Producing graphite from mineral deposits results in carbon dioxide (CO₂) emissions from the conventional mining process. However, the heat treatment of synthetic graphite is an energy-intensive process that releases harmful emissions.

According to one study, the manufacturing of synthetic graphite produces roughly 4.9kg of CO₂ per kg of graphite. That’s roughly three times the amount of CO₂ emissions that come from producing 1kg of natural graphite.

Additionally, natural graphite is also cheaper to produce than synthetic graphite. According to research from the Öko-Institut in Germany, anode material made from natural graphite is priced between $4 and $8 per kg, while synthetic graphite-based anode material costs $12-$13 per kg.

The Anode Material for a Green Economy

Critical minerals like graphite are becoming increasingly important in the transition to clean energy. However, managing the environmental impact and efficiency of producing these raw materials is just as important.

With a lower environmental footprint and lower production costs, natural graphite is the anode material for a greener future. As the energy transition continues, new graphite mines could play a key role in meeting graphite’s rapidly growing demand.

Are Copper Prices in a Supercycle? A 120-Year Perspective

There are multiple factors that could fuel the price of copper to record highs, including the global recovery from the COVID-19 pandemic, the U.S. trillion-dollar stimulus package, and the ongoing energy transition.

As a result of this, some global banks are predicting a supercycle for the metal, i.e., a sustained spell of abnormally strong demand growth that producers struggle to match, sparking a rally in prices that can last decades.

To put the current trend into perspective, the above graphic uses data from the U.S. Federal Reserve and consultancy Roskill to picture copper’s previous rallies over the last 120 years.

The Rise of a Super Power: U.S. Supercycle

Industrialization and urbanization in the United States sparked the first supercycle of the 20th century. Machines replaced hand labor as the main means of manufacturing and people moved to cities in record numbers. Immigration and natural growth caused the U.S. population to rise from 40 million in 1870 to 100 million in 1916.

“What’s right about America is that although we have a mess of problems, we have great capacity – intellect and resources – to do some thing about them.” – Henry Ford II

The value of goods produced in the U.S. increased almost tenfold between 1870 and 1916. The cycle was succeeded by the Great Depression, with a sharp decline in world consumption that brought the copper price to the lowest since 1894 ($4,690 per tonne).

Pax Americana: The Post-War Copper Supercycle

During WWII, the U.S. government considered copper a critical metal to the military. In order to conserve copper supply, the use of copper in building construction was prohibited, specific products with copper were limited to 60% of its previous war usage, and the War Production Board allocated supply to specific manufacturers.

At the center of global copper markets, the London Metals Exchange fixed the price of copper at £56/tonne ($3,514 per tonne, adjusted to 2021 inflation) during the war and the government issued permits to control purchases. The official price would rise after the war due to increased demand from reconstruction and the rise of the automobile, but price controls were not lifted until 1953.

The United States, Soviet Union, Western European, and East Asian countries experienced unusual growth after World War II. The reconstruction of Europe and Japan powered the commodities market and despite the scale of material damage, industrial equipment and plants survived the war remarkably intact.

“I was very lucky, I was part of the post-war period when everything had to be redone.” – Pierre Cardin

The outbreak of the Korean War in 1950 further strengthened demand as countries commenced strategic stockpiling programs. In January 1951, the US government imposed a ceiling price of 24.6¢/lb on domestic copper which remained in place until the end of 1952. Price controls held U.S. domestic prices lower than world prices, creating shortages.

According to assets managing firm Winton, U.S. prices remained lower after the release of these controls, as producers sought to prevent the substitution of copper wiring with cheaper materials such as aluminum. This two-tier market – producer prices for U.S. consumers and LME prices for everyone else – was in place until 1970.

The Pax Americana spanned from the end of the Second World War in 1945 to the early 1970s, when the collapse of the Bretton Woods monetary system and the 1973 oil crisis caused high unemployment and high inflation in most of the Western world. Prices jumped to $9,196 per tonne in 1973.

The Four Tigers and The Rise of China: Asian Supercycles

The massive growth of East Asia nations drove the next two supercycles of the century: (1983-1994) and the 2000s commodities boom (2002-2014).

Specifically, Japan played a central role in the third supercycle of the century. The country achieved record economic growth, averaging 10% a year until the seventies. Its economy grew from one less productive than Italy to the third-largest in the world, behind only the United States and the Soviet Union. Growth was especially strong in heavy industry and in advanced technology.

The most recent cycle started in 2002 after China joined the World Trade Organization (WTO) and started to modernize its economy. The country entered a phase of roaring economic growth, fueled by a rollout of infrastructure and cities on an unprecedented scale. Copper price reached $9,000 per tonne in May 2006, pressured by strong Chinese demand.

Are Copper Prices in a Supercycle?

Previous copper rallies reveal a pattern of broad-based growth, industrialization, and new technologies can help drive the demand and prices. Is the global economy entering such a phase?

As world economies emerge from the COVID-19 pandemic and decarbonization is top-of-mind in many countries, copper is set to play a key role as an electrical conductor. Electric and hybrid cars use more copper than regular gasoline vehicles – 165lbs, 110lbs and 55lbs respectively. Renewables also demand more copper: A single wind farm can contain between 4 million and 15 million pounds of metal.

The copper price hit a record high in May 2021 ($10,476 a tonne) and trading house Trafigura Group, Goldman Sachs, and Bank of America expect the metal to extend its recent gains. Whether it will be enough for a new supercycle is yet to be seen.

Hindsight is 20/20 but the future looks electric.