The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Global mined graphite supply is being outpaced by enormous EV demand; nearly 100 Graphite Creek-size mines needed North of 60 Mining News – October 7, 2022
A colorful Alaska west coast sunset paints the backdrop for Graphite One's exploration camp at Graphite Creek.
Tesla's Gigafactory One in Nevada requires roughly 33,000 metric tons of flake graphite each year.
A lens of outcropping graphite at the Graphite Creek project in Alaska.
The 98-kilowatt-hour battery powering each Ford Lightening electric truck requires nearly 240 pounds of graphite.
A shortage of the graphite required for the lithium-ion batteries powering the transition to electric mobility is elevating the criticality of Graphite One Inc.'s plans to develop a mine in Alaska and advanced graphite processing and recycling facility in the Pacific Northwest.
"Our strategy is to build a complete graphite anode supply chain – from mine to battery – located in the United States," said Graphite One CEO Anthony Huston. "And to complete the circular economy for battery materials, G1 is also adding a battery materials recycling facility to feed recovered materials right back into our manufacturing process."
As the primary ingredient in the anode side of lithium-ion batteries, graphite is the single largest of the mined materials that go into these electric vehicle fuel tanks. A 30 gigawatt-hour lithium battery factory, roughly the size of Tesla's Gigafactory One in Nevada, requires approximately 33,000 metric tons of flake graphite each year.
The global lithium-ion battery supply chain experts at Benchmark Mineral Intelligence have identified more than 300 gigafactories in operation, being built, or on the drawing board for development around the globe. These battery factories are creating giga-scale demand for graphite.
"The central demand driver for the graphite market is now the electric vehicle. It's become the largest end market for flake graphite," said George Miller, senior price analyst at Benchmark Mineral Intelligence.
In a report published earlier this year, S&P Global Platts' forecast that automakers alone will need more than 5 million metric tons of graphite per year by 2030.
This compares to U.S. Geological Survey estimates that only about 1 million metric tons of graphite was mined globally during 2021.
This means that a batch of new graphite mines with the combined output of all the graphite produced around the globe during 2021 would need to come online every two years to keep pace with demand between now and the end of the decade.
And the mining sector is already falling behind.
"This is the first year that battery anode demand will overtake demand from the refractory and foundry industries," said Miller. "It is also the first year we expect a structural deficit for the graphite industry in the gigafactory era, with new supply now needed to meet rapidly rising near-term demand."
Home to the largest known graphite deposit in the U.S., Graphite One's Graphite Creek mine project in western Alaska is a top candidate for providing American automakers with a domestic supply of this material vital to their e-mobility ambitions.
Located near Alaska's west coast, about 40 miles north of the legendary gold mining town of Nome, Graphite Creek hosts 32.5 million metric tons of measured and indicated resources averaging 5.25% (1.7 million metric tons) graphite, plus 254.7 million metric tons of inferred resource averaging 5.11% (13 million metric tons) graphite.
And this resource estimate represents a small fraction of the layers of graphite that extend for more than 10 miles across the Graphite Creek property.
"Graphite Creek is the largest deposit of graphite in the Nation, and would be a superior domestic supply of this critical mineral, which is necessary for modern batteries, renewable energy technology, and many other high-tech uses," said Alaska Gov. Mike Dunleavy.
A prefeasibility finalized for Graphite One in August envisions a mine at Graphite Creek that would produce an average of 51,813 metric tons of graphite concentrate per year, which would be shipped to a new processing facility in Washington to be transformed into the battery-grade graphite product the auto sector is craving.
Utilizing the graphite concentrates shipped from Alaska, along with purchased graphite material, Graphite One's planned Pacific Northwest processing plant would produce 49,600 metric tons of spherical coated graphite that serves as the anode material in lithium-ion batteries and 25,400 metric tons of other graphite products per year.
"At this point, with drilling to date of just 7% of our 16-kilometer deposit showing a pre-tax NPV (net present value) of $1.9 billion, we see Graphite Creek as a generational strategic resource," said Huston.
With the rapid transition to e-mobility driving the demand for nearly 100 new Graphite Creek-sized mines by the end of the decade, policymakers in Washington, D.C., are providing incentives to establish graphite and other battery materials production in the U.S.
The Inflation Reduction Act offers companies that produce lithium-ion battery materials in the U.S. with a tax credit equal to 10% of the production costs. This credit begins to fade by 25% per year starting in 2030.
The $750 billion piece of legislation offers a second tax credit equal to 10% of the costs incurred in relation to the production of 99.9% graphite on American soil. This credit does not have a sunset date.
Graphite One's mine-to-coated spherical graphite anode material supply chain would qualify for both tax credits.
"Benchmark Mineral Intelligence has just made the call that we are now entering the first supply deficit of the Gigafactory Era, driven by the rapid rise in natural graphite demand for EV batteries," said Dan McGroarty, president of the American Resources Policy Network and a member of Graphite One's advisory board. "With this supply shortage emerging just as U.S. policy is implementing incentives for domestic production – tax incentives and domestic content rules for EV batteries – this is a defining moment for the technologies that will define the 21st century. It's time to make the connection between the transition to renewable energy and the tech metals that make it possible."
American automakers that must depend on imports, primarily from China, for their current graphite needs have already made this connection and want policymakers to do more to support domestic supply chains of critical EV metals.
This is because China dominates the production of rare earths and lithium-ion battery materials, including more than 80% of the graphite mined and more than 99% of the graphite anode material produced globally.
At the same time, the U.S. has no graphite mines.
New EV tax incentives included in the inflation reduction act, juxtaposed against the long lead times to permit mines in the U.S., have created a conundrum for American automakers.
"Today's lengthy, costly and inefficient permitting process makes it difficult for American businesses to invest in the extraction and processing of critical minerals in the United States," Christopher Smith, the chief government affairs officer at Ford Motor Company, penned in a recent letter to the U.S. Department of Interior.
One of the reasons automakers are increasingly petitioning lawmakers to streamline the nearly decade-long mine permitting process in the U.S. is tax credits offered to American EV buyers in the recent Inflation Reduction Act hinge on materials from friendly countries going into those electric cars, trucks, vans, and SUVs.
Starting in 2023, at least 40% of the materials in the battery of a purchased EV must be produced in the U.S. or a free trade agreement country to be eligible for the tax credits. This domestic materials requirement climbs by 10% per year until 2027, at which point it will remain steady at 80%.
Additionally, EVs with battery components or critical minerals supplied by "foreign entities of concern" will not be eligible for the tax credit starting in 2024 and 2025, respectively.
Even before the passage of the IRA, American automakers were looking for more reliable supplies of these critical materials that do not come with the environmental and human rights liabilities associated with mined materials from China, Democratic Republic of Congo, and other countries.
"As I've stated before, we currently get our materials for EVs from China, where environmentally responsible mining and processing is non-existent and has caused significant harm to surrounding areas and populations (yet good enough for us to use in EVs, wind turbines and other renewables)," Smith penned in his scathing letter to DOI.
The Graphite Creek deposit in Alaska offers one domestic, secure, and environmentally responsible option for the batteries that power EVs and store electricity generated by wind turbines and other renewables.
Further details on Christopher Smith's letter to DOI can be read at Ford calls for US mine permitting reform in the September 1, 2022 edition of Metal Tech News, a sister publication to North of 60 Mining News.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
Reader Comments(0)