By 2030 it is expected that will be 40 million electric vehicles on the road in Europe – 6 times more than the 5.3 million in 2023. Electric vehicles are expected to represent 35% of all vehicles on the roads in 2030 – a 13x increase from 2020 levels.
The EU is set to meet 89% of its demand for EV batteries by 2030 by making around 11 million batteries a year. This has required huge investment in the battery supply chain.
Naturally, this will also require a huge demand for the raw materials that go into an EV battery. Including lithium, nickel, and graphite.
The World bank estimates that about 4.5 million metric tonnes of graphite will be needed to be produced annually by 2050 to keep up with demand in the energy sectors – over 300% increase from 2021 production (1.03 million tonnes).
EV batteries contain two electrodes – an anode (negative) on one side and a cathode (positive) on the other. An electrolyte is in the middle and moves ions between the electrodes when charging and discharging.
Graphite makes up the dominant anode material for the 2 most common forms of batteries – lithium-ion and lithium Iron Phosphate. Approximately 1kg of graphite is needed for every kWh of battery energy, making it by weight the most significant element of a battery cell. Graphite represents approximately 35% by weight of a standard lithium-ion battery.
The Graphite used in batteries is produced in 2 forms – natural and synthetic. Natural is mined and synthetic is produced from roasting by products of coal and petrochemicals. The roasting is a very high energy intensive process with a high level of emissions.
The final process of creating graphite Battery Anode Material is complex and involves several steps purification, micronizing, purification, spheroidization, and coating.
About 70% of the world’s graphite (natural and synthetic) comes from China and over 90% of Battery Anode Material.
A recent article in mining.com highlighted how carmakers including Tesla and Mercedes Benz, are rushing to secure graphite supply from outside dominant producer China, as demand for electric vehicle (EV) batteries surges. The article noted car makers are knocking at the doors of new producers, such as Madagascar and Mozambique, as in 2023 EVs are forecast to account for more than 50% of the natural graphite market for the first time, according to consultancy Project Blue.
Currently, there is no battery anode production in central Europe. Talga Group (ASX: TLG) have developed a pilot plant in Sweden that hopes to produce 19,500 battery anode material from its nearby natural graphite mine.
However, this will only be a drop in the ocean of expected European demand for battery anode material. Benchmark Mineral Intelligence estimates around 97 new natural flake graphite mines will be required by 2035 to meet expected demand.
Alternatives to graphite in anodes are being developed. However almost all current gigafactories are designed to produce lithium-ion or lithium iron phosphate batteries, so any use of replacement materials in electric vehicle batteries will be some time away.
Alongside the demand curve for battery anode material sits EU battery passport legislation and recent EU Raw Materials Act – both of which should result in increased diversification of supply and demand for more sustainable, environmental products.
The EU battery regulations will be phased in from 2023 and will enforce certain sustainability requirements for batteries. Included in the Battery Passport data will be details on entire carbon footprint from mining to production to recycling. Only EV batteries with an established carbon footprint declaration will be allowed onto the market.
The EU Raw Materials Act, announced in March 2023 will driver diversification of supply for European supply. The Act requires that for each critical raw material, such as graphite, no single country can supply more than 65% of EU requirements by 2030. It will also require EU processing for each critical raw material of 40% of EU requirements by 2030.
Whilst demand tapered in 2022, Fastmarkets, forecast demand for graphite from the battery sector to rise by 37% year-on-year from 2023. They see demand growth outpacing supply in the second half of 2023 with the market tightening further in 2024.
In the graphite sector, several Australian companies are strongly positioned to benefit from the expected increase in demand and legislative tailwinds.
Volt Resources (ASX: VRC; FSE: R8L)
Volt Resources is a critical minerals and battery material company listed on the Australian Stock Exchange and dual listed in Germany. The company has a global strategy with significant graphite reserves in Tanzania and Ukraine.
There have been some recent announcements from Volt resources which highlight the company’s strategic advantages.
In June 2023 the Company announced its subsidiary Zavalievsky Graphite (ZG) in Ukraine has been identified as a strategic asset by European agencies – EIT Raw Materials and European Raw Materials Alliance. (ERMA). This was after the re-commencement of operations in Ukraine in 2023 with 1,015 tonnes of graphite concentrate produced year to date.
EIT Raw Materials and ERMA have identified approximately 50 investment cases targeting materials for energy storage and conversion across Europe and ZG is one of the few graphite projects included.
Earlier in 2023 ZG was elected from a European grant up to €600,000 through the EU Horizon Research and Innovation funding program. The project, named “GR4FITE3” includes six countries including Ukraine, Poland, Italy, Spain, and France. The aim of the project is to provide graphite resilience for lithium-ion battery anodes through a sustainable European end-to-end supply chain.
Volt is also moving forward with its global battery anode material strategy with a recent announcement that a North American based technology partner successfully produced Natural Graphite Anode (NGA) material using Volt’s natural flake graphite. The NGA was incorporated into a lithium-ion battery and tests showed long life cycle more than standard typical industry target.
Of significant interest for European investors and stakeholder are the Company’s plans to build and develop a battery anode materials processing plant in Europe. The company will commence assessing production sites and evaluating financing options in the near term.
The completion of funding for the development of Volt’s Tanzanian Bunyu graphite project is expected to be achieved shortly, after offtake agreement have been signed for all Stage 1 coarse graphite.
International Graphite (ASX; IG6; FSE; H99)
International Graphite is focused on becoming one the first Australian graphite producers with mine to market operations.
The Company has a significant graphite resource at Springdale in Western Australia and is also developing downstream Battery Anode Material processing capability at Collie, also in WA.
The Springdale inferred resources is 15.6 million tonnes and the fine natural graphite is very suitable for Battery Anode Material from test work completed in Germany. The mine is expected to have a low environmental impact with shallow multiple open pits and small, electric conventional mining equipment used and a estimated production of graphite concentrate of 40,000 -50,000 tonnes per annum. This will then be shipped to the downstream processing production facilities at Collie, located close by.
International Graphite’s Collie processing plant will be world class with very low power costs possibly utilising solar power. The flowsheet for Collie involves graphite micronising, spheroidising purified graphite (USPG) than carbon coating to produce coated spheroidised purified graphite (CSPG). The planned production is for around 18,600 tonnes of CSPG per annum and 20,000 tonnes of USPG.
The CSPG and USPG will be sold to Australian and global customers.
The Australian Government has been sufficiently impressed by the project and strategy to announce it will provide A$4.7 million to International Graphite to support the project and follows the release in mid-2023 of the scoping study showing outstanding economics for the proposed Battery Anode Material manufacturing facility.
International Graphite has a very strong commitment to ESG across the value chain. This includes working toward minimising carbon footprint between mining and processing, maximising usage of available green energy, contributing towards the growth and development of regional communities, transparency in reporting and compliance and implementing sustainability along the value chain.
Talga Group (ASX: TLG; FSE; TFX)
Australian based battery materials company Talga Group announced this week it had received the environmental permit for its commercial battery anode plant in Sweden. This decision paves the way for the company to commence refinery construction groundworks in late 2023.
Talga group has one of the most advanced vertically integrated battery anode material operations outside of mainland China. The planned BAM facility will produce 19,500 tonnes per annum of BAM using 100% hydropower.
The BAM facility will be supplied by Talga’s Vittangi graphite mine, which is already fully permitted to process 120,000tpa of ore to 2070. Recent drilling has expanded the JORC reserve to 36.9 million tonnes.
Talga has entered into offtake agreements for supply of BAM with Automotive Cells Company (ACC) – owned by Mercedes-Benz, Stellantis and Saft. The offtake is for its patented Talnode BAM for 60,000 tonnes over a 5-year term starting 2026.
With over 98% of EU supply of Battery Anode Material coming from China and a requirement this be no more than 65% of the EU requirements in 2030, the race is on to secure sustainable, low Co2 processed graphite and BAM from reliable, low -risk countries and suppliers. Australian based companies such as Volt Resources, International Graphite and Talga Group are well positioned to benefit.