Why Graphite Is a Critical Material For The US

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I never expected to be talking metals — let alone the nitty-gritty of graphite — with my doctor.

Several weeks ago, I made an appointment with an otolaryngologist (an ear, nose and throat specialist, to the uninitiated) to follow up on an ear infection I’d contracted. When I sat up on a high examination table in a small room with a window and a huge cross-section of an ear on the wall, the short, gray-haired and good-spirited doctor and I got to talking about what I did for a living.

When I told him, he whipped off his glasses and barely took a breath before shooting me a question: “What do you know about graphite?”

After I mentioned its uses in the steelmaking process and that I thought it played a role in electric car batteries, he was visibly excited; little did I know then that we would talk about graphite investing and the future of graphite prices the rest of my visit.

Indeed, we talked about that much more than my ear, which seemed a cakewalk compared to the intricacies of graphite price volatility.

As MetalMiner has reported before, the US State Department, British Geological Survey and the European Commission have all declared graphite to be a critical raw material, due to its importance in crucial industries such as steel, lithium-ion batteries, and nuclear reactors. (Although it’s a semimetal, graphite plays auxiliary roles across metals sectors.)

Other critical materials, so-called “conflict minerals,” which do include metals, have been in the news this week in a big way — check out exclusive MetalMiner coverage of how the SEC ruling on audits will affect small and large companies’ supply chains alike.

Lithium-ion batteries, widely used in cell phones, power tools and notebook computers, contain almost twenty times more graphite than lithium. According to a Canaccord research report, “annual flake graphite production will have to increase by a factor of six by 2020 to meet incremental lithium carbonate requirements for batteries.”

The US does not produce natural graphite domestically and is almost completely dependent on imports for graphite supply. More than 50 percent of the US’ graphite requirement is met by imports from China, which is a cause for concern for the US government. Many governments around the world are very intent on developing fuel cells through large-scale funding. Graphite is a primary raw material used in the bipolar plates of these fuel cells.

But of course, Dr. Sheep (as I’ll call him here) already knew most of this, especially of the metal’s use in car batteries. He was also keenly aware that two North American graphite-mining companies in particular aided his retirement kitty quite nicely, if surprisingly.

Check back in for Part Two.

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